Sunrise breached broadcasting standards for accuracy and provoked serious contempt on the basis of race when it aired an all-white panel discussing the adoption of Indigenous children and child abuse, the media watchdog has ruled.

An investigation by the Australian Communications and Media Authority found that the March segment, hosted by Samantha Armytage with commentators Prue MacSween and Ben Davis, was in breach of the industry code of practice as it contained strong negative generalisations about Indigenous people as a group.

“These included sweeping references to a ‘generation’ of young Indigenous children being abused,” Acma said.

“While it may not have been Seven’s intention, by implication the segment conveyed that children left in Indigenous families would be abused and neglected, in contrast to non-Indigenous families where they would be protected.”

Acma’s chair, Nerida O’Loughlin, said broadcasters could discuss “extremely sensitive” topics such as child abuse in Indigenous communities but had to exercise great care “with editorial framing to ensure compliance with the code”.

“The Acma considers that the high threshold for this breach finding was met, given the strong negative generalisations about Indigenous people as a group,” she said.

Seven has rejected the findings and will seek a judicial appeal, a move the network has taken on several occasions before. Its director of news and public affairs, Craig McPherson, blamed political correctness and censorship for the Acma decision.

“We are extremely disappointed the Acma has seen fit to cast a label on a segment that covered an important matter of public interest, child abuse, sparked by comments attributed to a government minister and widely circulated in the press on the morning of the broadcast,” McPherson said.

“The finding seeks to rule out issues and topics for discussion segments, as determined by Acma. Its decision is a form of censorship; a direct assault on the workings of an independent media and the thousands of issue-based segments covered every year by Sunrise, other like programs, newspapers and talkback radio.

“While the Acma recognises the segment was underpinned by concern for the welfare of Indigenous children, it has isolated comments from independent commentators without any context to the broader coverage given to this topic.

“The coverage included a detailed follow-up segment on Sunrise featuring expert analysis from leading Aboriginal leaders and academics who expressed appreciation this issue was finally being raised in mainstream media.

“The irony is that the very issue the commentators were critical of, that is political correctness preventing meaningful discussion and action, has come to bear with this finding.”

Acma found that the “detailed follow-up segment” was not a correction because it was not labelled as such and the original segment was not mentioned. “Had the presenter explicitly acknowledged the inaccurate statement from the previous episode and corrected that statement, the Acma would have been satisfied that the correction was made in an appropriate manner,” the report said.

The segment included comments by MacSween that the stolen generations policy removed children for their own wellbeing and “perhaps” it should happen again.

The panel discussed a News Corp article which claimed that the federal assistant minister for children, David Gillespie, had called for “white families” to be “allowed to adopt abused Indigenous children”.

Acma found that the claim that Indigenous children could “only be placed with relatives or other Indigenous families” was inaccurate and said Seven should have verified the claim itself rather than relying on the newspaper report. “The principle does not prevent the placement of Indigenous children with non-Indigenous carers; rather, it prioritises care within the child’s extended family and in Indigenous communities,” the report said.

Gillespie had also said the report was inaccurate and misrepresented his view.

The panel sparked protests, which Sunrise kept out of its live broadcast by playing stock footage behind the hosts’ desk.

Seven says the protest couldn’t be shown on screen was because the protesters were banging on the glass and screaming obscenities. “We have a legal responsibility about what goes to air, particularly at that time in the morning,” a spokesman said.

The clauses breached were clause 3.3.1 for accuracy and clause 2.6.2 for intense dislike, serious contempt or severe ridicule on the basis of race.