You heard right. In relation to the no longer with us The Sarah Jane Adventures wanted a gay character and the character in question ...
Luke Smith as played by Tommy Knight (who is now a regular in Waterloo Road). In the commentary for the story Death Of The Doctor on The Green Death Special Edition DVD it seems that Luke's friend Sanjay (mentioned in the story) would've been revealed as Luke's boyfriend and according to writer Joseph Lidster, the fourth series opening story The Nightmare Man would've had a line where Luke might have suggested his preference for men as well but it was cut at the last minute.
I have to admit there were times in the show when I did wonder a bit about Luke so the fact that CBBC themselves were keen on having a gay character on The Sarah Jane Adventures is rather encouraging. Perhaps maybe we'll eventually see one in the likes of Wizards Vs. Aliens or Wolfblood or something else down the line but either way, it's an interesting reveal and a further example of how The Sarah Jane Adventures really was ahead of other shows in it's genres.
More Information: http://blogtorwho.blogspot.co.uk/2013/07/cbbc-wanted-sja-gay-character.html
The Green Death Special Edition is available on DVD from August 5th.