The federal government’s proposed ad-averaging bill could lead to SBS airing more ads in prime time than the commercial networks, Channel Ten head of broadcast policy Annabelle Herd told a Senate committee hearing yesterday.

Speaking in Melbourne on a panel of commercial broadcasters warning the committee of the impact of the bill, Herd said the advertising cap on commercial networks was 13 minutes per hour, but that this included in-house promos and the like. Meanwhile, SBS’ proposed cap would be 10 minutes per hour, but that figure does not include in-house promos.

Previous advertising logs compiled by viewer lobby Save Our SBS found SBS often aired four minutes of promos per hour, in addition to its ads. Four minutes of such promos, plus the 10 minutes of allowed advertising if the bill passes, would give SBS 14 minutes of advertising an hour, which is more program disruption than the commercial broadcasters are allowed to have.

It was a point made by the other commercial networks and their lobby group Free TV Australia. “In terms of what viewers will see, it will look the same [as the commercial networks],” Free TV CEO Julie Flynn said.

Coming at a time when the TV networks are facing a virtually flat advertising market and greater competition than ever from digital disruption, the proposal would have a material impact on the fortunes of the TV networks, senators were told.

SBS, however, played down the concern, saying it was not currently filling all its ad slots. As Crikey has reported, on selected nights in prime time, SBS entirely fills its 30-minute advertising allocation. However, director of corporate affairs Peter Khalil told the committee it was “unrealistic” to assume SBS would fill all its ad slots over the next four years. He also disputed the commercial networks’ contention that SBS would have an equal level of advertising to those networks. “They have 360 minutes over 24 hours — we have 120 minutes.”

The government’s bill would give SBS advertising flexibility to air more ads in prime time over other periods, but not affect the total daily advertising cap.

The Seven Network’s head of corporate and regulatory affairs, Bridget Fair, had earlier asked the senators why they would incentivise behaviour that led SBS away from its charter. “The more commercial the operation, the less likely you are to be catering to niche, multicultural interests,” she said.

But Khalil dismissed concerns the further commercialisation of SBS would serve to dilute its commitment to its charter. “The charter is at the heart of SBS. It’s principal function is multicultural and multilingual content.”

“Any revenue we raise goes to content and services. I want to dispel this notion that this is a threat to our charter. We’ve been [partly commercially funded] for  nearly 25 years. We know how to do it. We just want the ability to make incremental revenue gains where it’s practical and appropriate.”

Around the world, public broadcasters are generally at least partly funded by commercial advertising revenues, with the ABC and BBC being the major exceptions, Khalil said. But even the BBC’s Channel 4, he said, had advertising — it has the same ad cap as Britain’s commercial networks. As to whether SBS would seek broad viewership over its charter obligations, Khalil said large ratings did not necessarily lead to greater revenues.

“This idea that advertising leads to populist content is not correct,” Khalil said. “Our big programming doesn’t make money for us.” SBS’ top-rating Struggle Street, for example, did not make money for the network, he said, before passing the floor to SBS director of ad sales Andrew Cook.

“I can absolutely say that the three-fold increase in audience for Struggle Street didn’t lead to a three-fold increase in net revenues. If anything, we saw a decline,” Cook said. Advertisers, he added, tended to be scared off controversial content. Cook stressed that his department had no say over programming decisions at SBS.

Failure to pass the bill, Khalil said, would necessitate cuts to content at SBS. It’s a claim that mirrors that of the commercial broadcasters, which say the networks most affected would have to cut jobs and content as a result of being forced to “subsidise” the government’s funding cuts to SBS.

In earlier combative testimony, Save Our SBS said SBS had been trying to increase advertising on the network for years. The group gave two pieces of evidence for this. President Steve Aujard said in 2012, he’d had meetings with SBS executives during which they had raised the prospect of further advertising with him. He also cited comments made by department secretaries at Senate estimates last year, where they confirmed SBS had raised the prospect of advertising flexibility well before the Lewis Review.

“It’s not something that SBS has been secretive about,” Simon Pelling from the Department of Communications told the Senate in November. Aujard said SBS was behind the changes, saying SBS’ management was committed to making the network more commercial in operation. Asked whether SBS had asked for the changes, Khalil said he wouldn’t characterise it like that. But he did say it might have been one of several options for raising revenues discussed with the government.

The bill being considered also contains a provision formally allowing SBS to introduce product placement into its programming. Aujard raised concerns about how the bill structured the guidelines around product placement. “The explanatory memorandum to the bill states the at the guidelines would be included in the SBS codes of practice,” he said. “However, the bill has been so poorly drafted that it places no such requirement on SBS … [it] merely requires that the SBS board develop and publish their guidelines about product placement.” Failure to include such guidelines in the formal code of practice, Aujard said, meant viewers would not be able to raise concerns about the operation of product placement with the Australian Communications and Media Authority, which has no power to investigate breaches of guidelines. “There is no justice in a law that is framed so that consumers are denied an avenue to have a wrong made right,” he said.

Save Our SBS has, in the past, had a good relationship with SBS management, but it’s unlikely to be invited to briefings in the immediate future, having poured its influence into halting the ad-averaging bill. Failure to do so, the group believes, would lead to irrevocable commercialisation of the multicultural broadcaster. Asked whether the group was threatening its future relationship with SBS by so fiercely opposing the bill, Save Our SBS member (and veteran journalist) Quentin Dempster told Crikey: “What’s a friend for, if they can’t tell you when you’re going wrong?”

Now that the public hearing has occurred, the Senate’s Communications and Environment committee has until May 29 to issue a report with a formal recommendation on whether the Senate should adopt the bill.