tip off

The ABC is efficient, but we shouldn’t fund it

Any comparison with commercial networks shows the ABC is efficient. But that doesn’t mean taxpayers should be spending money on a public broadcaster, argues CCZ Statton Equities markets analyst Roger Colman.

The argument around the ABC’s efficiency, ultimately, comes down to bang-for-buck analysis. Aunty’s radio and TV operations can be relatively easily compared with commercial operators; ABC costs in community service obligations, such as orchestras and remote regional radio services, are not. These peripheral services would have no comparable commercial service even if there were no ABC providing the service.

How efficient is the ABC? In 2012-13, the ABC spent $1.167 billion, of which $1.023 billion came from the taxpayer. The Seven Network, in the same year, spent $977 million and Southern Cross Media’s metro Austereo network costs were $178 million — a combined $1.155 billion for a typical commercial metro radio and TV network equivalent. The Southern Cross Media regional TV and radio expenses adds another $264 million of expenses to make a better comparative with the ABC’s network spread in radio and TV. Adding these together brings the commercially equivalent cost base total to $1.419 billion — 21% more than the ABC. Looks cheap, doesn’t it?

But then one needs to look at what taxpayer dollars buy in ratings. Here, the Seven Network (2013: 6am to midnight) generated 40% more ratings (29.4 versus 21). However in radio, Austereo, the number one commercial network,  rated an average of 16.9% across the five major capitals (2013: survey eight) versus the ABC radio networks metro combined of 22.4%, making the ABC an audience winner in radio. It all looks about right for bang (ratings) per buck.

However, like all things given away for free, the ABC’s ratings are higher than if they would be Aunty were funded by advertising or subscriptions. Embedding commercials into programming or requiring a subscription fee could dramatically reduce the ABC ratings shares. But as a rough guide the ABC delivers a pretty good bang for buck in ratings to cost of service.

Any efficiency audit looks like it would not yield much gain on the above figures. As human costs are most of a network’s costs and programming costs are market based, why is the ABC so cheap for the quantity of content and audience attraction? Aunty’s major cost advantage is perhaps the lower salaries that its more charitable talent is willing to work for.

So to the question of governments actually owning media. Most governments own or control media around the world, and convention has prevented some public broadcasters like the ABC, BBC and CBC becoming like Lenin’s Pravda and Himmler’s Der Sturmer. As a matter of principle, no democracy should have a government-owned or controlled media, as governments are inclined to bend a government service to the incumbent’s benefit.

If this is a prime issue, and it should be, the ABC should be privatised — it’s the only fair way to solve the problem of the ABC’s bias image. Bias is an unresolvable issue for the ABC and, because we all pay for it, we have a right to complain. If privatised, the debate about bias is largely neutralised.

The most coherent argument against the public ownership of the ABC is why should some viewers pay for the content they watch — either by advertisements, a subscription service or pay for downloads — and others not. ABC programming is probably very much oriented to the income groups that can well afford to pay for the ABC service. Government spending on the ABC is therefore highly income-regressive — definitely the case for prime-time SBS audiences. Everybody pays for an upper socio-economic demographic getting the most benefit. At least in New Zealand, TVNZ is advertiser supported and makes a profit even before the small government grants for service obligations.

Furthermore, although the ratings look OK relative to spending, the broadcaster’s poor reach implies it is not “our ABC”. The reach differences are stark. In 2013, the ABC TV reach was 59.9%. In 2012-13, reach was 87.5% for both Nine and Seven, and 83.7% for Ten. These networks cater for all Australians. The ABC misses a massive 40% who, through a year, simply don’t watch the ABC at all. The ABC serves a 30%-plus smaller proportion of the Australian populace.

Neither should content gaps be an issue in this digital age. Those decrying that commercial media does not cater for their ABC-style programming should look at this issue from the standpoint that a free service, without advertisements or subscription services, has crowded commercial media out of key programming genres.

Forget about efficiency for the ABC — all ABC issues would be solved by privatising the beast. I can’t wait to buy shares in ABC Ltd.

Related stories:

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  • 1
    Darwin
    Posted Thursday, 13 March 2014 at 1:33 pm | Permalink

    Keep publishing tripe like this, Crikey, and you’ll lose my subscription. What a load of shite.

  • 2
    billie
    Posted Thursday, 13 March 2014 at 1:44 pm | Permalink

    I wonder what proportion of the population only watch ABC and SBS TV and what proportion of the population listen to ABC radio in areas where its available.

    Like most of the population I rely on the ABC and SBS for news, bushfire information etc

    In this digital age if the ABC and SBS are sold I would probably get my news from BBC, not Fox or Channel 7, 9, 10

  • 3
    81dvl
    Posted Thursday, 13 March 2014 at 1:45 pm | Permalink

    You Pratt!

  • 4
    Bo Gainsbourg
    Posted Thursday, 13 March 2014 at 1:53 pm | Permalink

    What a crock. Noticed this guy didn’t mention democracy and public benefit in any meaningful way. The fact that the ABC’s quality input in to democratic debate is fundamental is overridden by his brainless “all government involvement is bad” teaparty type schtick. We can easily afford it,it provides an exemplary service and its standards of journalistic quality, balance and integrity put all other outlets to shame. These nitwits are trying to wreck Australia, lets not sit back and let them do it.

  • 5
    Karen
    Posted Thursday, 13 March 2014 at 1:54 pm | Permalink

    Colman, if the ABC had a right wing bias I don’t think you would be arguing for privatisation.

  • 6
    wayne robinson
    Posted Thursday, 13 March 2014 at 1:55 pm | Permalink

    Der Sturmer was published by Julius Streicher, not Himmler.

    If the ABC is biased, which I don’t think it is, privatising it won’t stop it being biased. It would just mean that the only way we could object to its bias is to refuse to watch or listen to it.

  • 7
    Richard
    Posted Thursday, 13 March 2014 at 2:09 pm | Permalink

    Lightweight garbage. Keane’s response destroys this.

  • 8
    Posted Thursday, 13 March 2014 at 2:27 pm | Permalink

    I guess I am biased, being one of those pesky “high-income” ABC lovers (i.e. I have a roof over my head that is 75% my own and could survive a month or so if I lost my job), but I don’t buy this argument. I would have outlined why but Bernard Keane has already done it far better than I could elsewhere at Crikey. Bless him.

    Personally speaking I have never believed tackling the ABC on economic grounds is worthwhile - as a percentage of public spending it is negligible and the returns for the piddling investment are immense. Unfortunately most of those returns are intangible but one thing that always lets me know that the ABC is still travelling OK is that whenever I have seen a survey that looks at the trust Australians have in their news deliverers the ABC has consistently rated the highest - usually by a country mile. Here’s a link to Crikey’s report on Essential Media’s polling last year as just one of the dozens of examples I have come across over the years http://www.crikey.com.au/2013/12/18/trust-in-media-abc-still-leads-telegraph-takes-a-hit/. You literally cannot buy this kind of trust. Even if I did accept that the very existence of the ABC has “crowded commercial media out of key programming genres” (which I don’t accept at all) I would still argue that a publically funded independent media organisation offers something that no commercial entity - even one with the noblest of intentions - can do at the same time as keeping happy all of their sponsors, advertisers and other providers of cash. Lasting trustworthiness in a media organisation is to be treasured.

  • 9
    paddy
    Posted Thursday, 13 March 2014 at 2:35 pm | Permalink

    Dear Crikey, I know it’s Thursday, but lame trolling like this will only end up costing you subscriptions.
    Hosting outrage clickbait behind a paywall is even more insulting than whacking it up on reddit. Enough!

  • 10
    zut alors
    Posted Thursday, 13 March 2014 at 2:38 pm | Permalink

    A purposely inflammatory piece.

    This doesn’t mention the inevitable dumbing down of programming should the ABC be privatised. Simply look to the dreck on commercial radio/TV stations for a long term image of what our national broadcaster could become.

  • 11
    klewso
    Posted Thursday, 13 March 2014 at 2:50 pm | Permalink

    The argument around the ABC’s efficiency, ultimately, comes down to bang-for-buck analysis”? That’s the sole criteria?
    Says who?
    Look what Murdoch does with his “efficiency” with news?
    And the efficiency of the free market came down to the GFC?

  • 12
    JohnB
    Posted Thursday, 13 March 2014 at 2:55 pm | Permalink

    The assumption that ABC is biased is an indication of the author’s bias.

    Does this loon really think that LimitedNews is other than furiously biased?

    What a waste of my afternoon this 5 minutes has been.

  • 13
    Phen
    Posted Thursday, 13 March 2014 at 2:55 pm | Permalink

    If that’s the extent of the arguments to privatise the ABC, I think its in pretty safe hands. Like many, its the only FTA channel I watch, and the only channel whose news offering doesn’t insult its viewers intelligence.

  • 14
    Malcolm Harrison
    Posted Thursday, 13 March 2014 at 3:00 pm | Permalink

    what absolutely arrant nonsense. there is not one cogent reason, outside of the fantasy world of rational economics, why the ABC should be privatised. I abhor economic rationalism. well actually I liked it for the first five minutes. Since 1985, though, its effects are seen to be totally destructive to any sense of community or in fact any social goal that doesnt have the economic bottom line as its primary focus. when are we going to stop investing in it? The ABC is fine the way it is, the disadvantages that Colman lists are to me advantages.m.

  • 15
    Scott Grant
    Posted Thursday, 13 March 2014 at 3:01 pm | Permalink

    Alternatively, we could improve programming standards dramatically by shutting down the commercials. A much better idea.

  • 16
    nullifidian
    Posted Thursday, 13 March 2014 at 3:07 pm | Permalink

    Does the author of this garbage really believe that the “FTA” commercial networks, pushing dumbed down entertainment interspersed with propaganda dressed up as marketing, cost the Australian community nothing? No subsidies, no levies on goods and services to pay for advertising? And, inefficiently to boot.

  • 17
    Austin ADAMS
    Posted Thursday, 13 March 2014 at 3:08 pm | Permalink

    Dear Roger,

    I listen to the ABC almost entirely though the podcasts of Radio National. I also listen to some BBC podcasts and to some from the US NPR (public radio).

    1. Yes, I can afford to pay and I’d be willing to pay quite a bit extra to avoid advertisements. I watch and listen to NO commercial media.

    2. You suggest that the existence of the ABC crowds out the commercials from those genres, but in the USA and NZ where are the commercials in science podcasts, for example? Who in the commercial world does anything akin to RN’s “Counterpoint” or to the BBC’s “Thinking Allowed”?

    3. Even the sponsorship ads of NPR grate. Can you tell me in all honesty you enjoy, rather than suffer through, the commercial content of any media you consume?

  • 18
    graybul
    Posted Thursday, 13 March 2014 at 4:08 pm | Permalink

    Assume Colman, you had “tongue firmly in cheek”. Consider risk, if someone had bounced, inadvertantly, knuckles on said chin. You may have bitten tongue. Consequence being huge swelling. You could have choked??

  • 19
    Andybob
    Posted Thursday, 13 March 2014 at 5:07 pm | Permalink

    I thought it was trolling until I came to the principle/principal error. Now I just think it’s sad.

  • 20
    Itsarort
    Posted Thursday, 13 March 2014 at 5:12 pm | Permalink

    So, when Woolies and Coles and others go on multimillion dollar advertising spending sprees filling up the coffers of Channel 9 and 7 etc, who pays at the checkout? I don’t even watch or read this commercial drivel yet I’m forced to pay for the excises(tax) caused by idiotic advertising. And I’m confident that Aunty, pound for pound, costs me less.

  • 21
    Bing Lim
    Posted Thursday, 13 March 2014 at 5:16 pm | Permalink

    Crikey!!! Crikey, what is the author thinking? It is really silly to compare the ABC with commercial telivision. Would commercial TV come up with programs or produce quality programs like QandA, Foreign Correspondent, Insiders, 4Corners, Landline just to name a few? I used to watch quite a bit of SBS but much less now because of ad breaks. So if you are suggesting that it works for SBS, I would say, it doesn’t. Audit if you must but big NO to commercial funding model.

  • 22
    drovers cat
    Posted Thursday, 13 March 2014 at 5:25 pm | Permalink

    You really published this tripe in crikey? Seriously?

  • 23
    marant
    Posted Thursday, 13 March 2014 at 5:29 pm | Permalink

    Roger asserts, “As a matter of principal, no democracy should have a government-owned or controlled media, as governments are inclined to bend a government service to the incumbent’s benefit.”

    The assertion could be made about the military; why not privatise the army and other services?

  • 24
    Brendan Jones
    Posted Thursday, 13 March 2014 at 5:38 pm | Permalink

    As a matter of principal, no democracy should have a government-owned or controlled media, as governments are inclined to bend a government service to the incumbent’s benefit.”

    That’s a bogus claim. Unlike the US, the Australian media has no constitutionally protected role to report public interest stories. In the Australian media 55% of stories (70% in some publication) are PR-driven, and beat journalists cross to the other side of the street to avoid reporting corruption. http://www.crikey.com.au/2010/03/15/over-half-your-news-is-spin/ + http://www.crikey.com.au/2001/06/03/why-does-australia-promote-secrecy-by-restricting-free-speech/

    Investigative journalism is bad for business, and the media has been a business since its inception. http://www.maynereport.com/articles/2009/03/10-1024-2493.html + http://victimsofdsto.com/online/#freespeech + http://netk.net.au/Whitton/OCLS.pdf p129

    If a commercial media wants to grow, particularly as part of a large conglomerate, kissing ass and running government PR is the way to go. http://victimsofdsto.com/lib/Dr%20Kim%20Sawyer%20-%20Mateocracy.html

    The role the ABC can play is covering public interest stories which the commercial networks won’t touch. Public perception (even amongst ABC staff) is they are different, but from an outside perspective dealing with the ABC is a lot like dealing with the commercial networks. They are so focused on producing content quickly and cheaply they don’t have the time for in-depth research, and routinely turn people reporting corruption away. 4 Corners is the only exception (and even then slots are limited). http://victimsofdsto.com/guide/whistleblowers_guide_to_journalists.pdf

    In know people looking for media to report on corruption and they can’t find anyone to report it. One man has been carrying around a story about a $20M fraud for 16 years, still unreported. The public remains in the dark, watching Spicks and Specks.

  • 25
    fractious
    Posted Thursday, 13 March 2014 at 5:48 pm | Permalink

    As a parody piece its arguments lack substance, factual errors abound and the grammar and spelling would disgrace a 12 year old.

    I mean, crikey, you can’t be serious.

  • 26
    Bill Parker
    Posted Thursday, 13 March 2014 at 6:17 pm | Permalink

    This rubbish typifies why bean counters destroy things. Keane’s story is actually worth reading ( as usual).

  • 27
    Altakoi
    Posted Thursday, 13 March 2014 at 6:36 pm | Permalink

    Oh please, “As a matter of principal, no democracy should have a government-owned or controlled media, as governments are inclined to bend a government service to the incumbent’s benefit.” Bollox. The ABC is just about the only thing stopping us from having an entirely media owned Government in which media owners (owner) choses the Goverment to which they are inclined.

  • 28
    AR
    Posted Thursday, 13 March 2014 at 7:07 pm | Permalink

    And the opinion of the “CCZ Statton Equities markets analyst” on so serious a matter is worth a pinch of the proverbial… why?
    As noted above, bean countersmay know the price of everything (though the GFC shows this to be another crock)and the value of nothing.
    The sooner such blights on society as market equities analysts wither from derision, the better for all thinking mammals.

  • 29
    Scott
    Posted Thursday, 13 March 2014 at 9:08 pm | Permalink

    This must be a joke. It doesn’t make sense otherwise.

  • 30
    Dogs breakfast
    Posted Thursday, 13 March 2014 at 9:32 pm | Permalink

    ” I have never believed tackling the ABC on economic grounds is worthwhile - as a percentage of public spending it is negligible and the returns for the piddling investment are immense. Unfortunately most of those returns are intangible”

    Pretty much sums it up.

    I would much rather see the commercials shut down than the ABC or SBS sold off.

    For TV, SBS news is the only source worth watching, even ABC has gone to the dogs, and as for commercial channels, I can count on one hand the shows I actually look forward to. I wouldn’t miss the commercial channels, and likely there will come a day when I don’t watchn them at all any more, but ABC and SBS actually provide something worthwhile.

  • 31
    Blair Martin
    Posted Thursday, 13 March 2014 at 10:03 pm | Permalink

    This is satire, no?

  • 32
    Ken Lambert
    Posted Thursday, 13 March 2014 at 11:02 pm | Permalink

    The ABC just could be a lot better…..up to the standard of the best of SBS which was remarkably good especially before advertising got free range.

    The ABC has been aiming low for too long. The soft leftists who run it are even unconvincing, more worried about their pay and their super. The champion presenter from media watch was on about $170K per year for a 15 minute show once a week!!

    What self respecting Trot would take that sort of cash out of the hands of the poor taxpayer?

    Me tooist news reports falling for all the same hyped up disaster porn we get from the commercial channels - is stock fare for Aunty.

    Of course the Aunty special is the endless running of criticism of the Abbott boat stopping policy. A policy which is working as planned.

    Even the weather reports are sub-par. Have you ever seen a USA commercial TV weather report? Sea surface temps, humidities, rain charts, synoptics, hourly predictions when it will rain in Dade County etc etc…Here we get the same tired old format with a few obscure rain records from places we never heard of which are not identified on the map!!

    And to top it all - Aunty professes to cover sport! Stills from the Olympics, clips of mainline sports which are cut before the real action stops and wait for it - extensive coverage of …..Netball!! Who invented womens Netball when we already have a feeble minded unisex game called Basketball??

    Bright spots include Micaliffe (Aussie Jon Stewart), but who dreamed of a unearthing of Spicks & Specks?? Its like trying to make a new Fawlty Towers with the cast of Frontline..

    I

  • 33
    Mutley
    Posted Friday, 14 March 2014 at 1:07 am | Permalink

    Listen to the excellent programs on Radio National. I don’t care if fewer people listen to them than Kyle and JackieO. That doesn’t decrease the quality of the programs.

    I don’t want to see our taxes spent on rubbish that degrade our society. The ABC is there to put out quality programs, not win ratings against The Great Australian Bakeoff or MasterChef.

    The droning yuppie who wrote this article would have us believe the ABC should above all aim for more “reach”, its content only being relevant in terms of how much “reach” it generates. That’s typical of the short sightedness of those so afflicted with a free market utopian delusion.

    He would see the ABC pile out junk to “win” ratings as if that is a justification in itself. Never mind how that would degrade our society. It wouldn’t be a “win”. It would be a huge loss.

  • 34
    Kevin_T
    Posted Friday, 14 March 2014 at 3:48 am | Permalink

    Googling “CCZ Statton Equities” indicates that the firm are stockbrokers. So the author, representing a firm of stockbrokers but not quite saying so, writes an article supporting the privatisation of a large Government owned media organisation and, apparently without irony, finishes with the line “I can’t wait to buy shares in ABC Ltd.”

    Indeed!

    No conflict of interest there then - just as there is never a conflict of interest for a commercial media company if they decide to tread softly when unfortunate news breaks about a paying advertiser….

    Media that is independent of such commercial interests is quite important, whatever percentage of the population choose to use it.

  • 35
    Malcolm Street
    Posted Friday, 14 March 2014 at 8:01 am | Permalink

    Re. TVNZ - just returned from three weeks over there and TVNZ is *cr@p*. It’s just another commercial station in all but formalities, and it’s news and current affairs coverage is rubbish. Relief to get back to the ABC.

  • 36
    The Old Bill
    Posted Friday, 14 March 2014 at 8:18 am | Permalink

    As Malcolm Street stated, TVNZ is a prime example of what happens when public broadcasters are privatised.
    If we don’t have an independant broadcaster, there will be no trustworthy televised news service left and we will be watching Tony Jones running a reality cooking show.

  • 37
    The Old Bill
    Posted Friday, 14 March 2014 at 8:18 am | Permalink

    As Malcolm Street stated, TVNZ is a prime example of what happens when public broadcasters are privatized.
    If we don’t have an independent broadcaster, there will be no trustworthy televised news service left and we will be watching Tony Jones running a reality cooking show.

  • 38
    Jeff Richards
    Posted Friday, 14 March 2014 at 9:14 am | Permalink

    Buy shares in a media company ? What fool would do that ?

  • 39
    Liamj
    Posted Friday, 14 March 2014 at 9:35 am | Permalink

    Democracy is impossible without a free, fair and open media, something unarguably not provided by commercial media, or ABC alone incidentally. If commercial media was doing a remotely competent job then the stocks salesman who authored the article mightn’t look so silly.

  • 40
    Michael Jones
    Posted Friday, 14 March 2014 at 10:37 am | Permalink

    I’m so glad to see the far right given right of reply on crikey. It’s not as if they to present their views anywhere else.

    Certainly not on the ABC, where at least half of every panel is from the Murdoch press, conservative think tanks, and the coalition.

  • 41
    Malcolm Street
    Posted Friday, 14 March 2014 at 11:24 am | Permalink

    “As a matter of principal, no democracy should have a government-owned or controlled media, as governments are inclined to bend a government service to the incumbent’s benefit.”

    Do they? And why is that worse than the very well known record of private owners using their media to push their own interests, qv Murdoch.

  • 42
    PDGFD1
    Posted Friday, 14 March 2014 at 11:56 am | Permalink

    MJ #40… nice one!

    Meanwhile… hold fire Crikey subscribers.. it’s a good thing to ‘hear’ from the ‘right’… Give the guy a go, he’s entitled to his opinion.
    Moreover, quality discourse is a good thing. For some 6 years one has needed a magnifying glass to find any well-reasoned and calm argument from ‘the right’.
    Agreed, Mr. Colman’s current article wouldn’t actually be referred to as superior quality writing… but consider the source, what exactly do you expect from a share broker/trader/ whatever? Monetary issues uber alles I would posit.

    Here’s what I don’t ‘get’…
    Anyone over 15 knows that successive governments have complained about ABC ‘bias’… Swings and roundabouts people.

    Moreover..
    I’m not sure that the ABC shouldn’t be ENCOURAGED to have a ‘bias’… everyone waffles on about ‘balance’ being so important… but what about providing a ‘counterbalance’?

    The mandate of a commercial business is to make money… the bottom line is the bottom line.
    Sadly for the general media consumer,and for civil society, appealing to the lowest common denominator apparently achieves that aim.
    Some media owners also choose to push their own political agenda… wielding as much influence as they can in order to make more money. The argument is couched in ‘shareholder value’… but anyone with 3 brain cells is aware of what that ‘code phrase’ means.

    We have several commercial media outlets doing their best to make money and to persuade us all that their view of the world is correct - so they can ‘add shareholder value’.

    The purpose of the ABC is not to make money.
    It does need to produce value for money, but anyone other than a ‘ranter’ would agree it does that.
    Both the ‘right’ and the ‘left’ like to complain that their ‘values’ aren’t being given enough weight, but basically the ABC provides an excellent service to us all, at a reasonable ‘rate’.

    Should we in fact be asking that the ‘focus’ of the ABC be altered from one of ‘balance’ to ‘counterbalance’?

  • 43
    David McRae
    Posted Friday, 14 March 2014 at 2:13 pm | Permalink

    I know this article is just clickbait .. but also good advertisement for CCZ Statton Equities - if you get advice from them, do the opposite I would think.

    Buy ABC shares! Yeah. One can imagine the routine .. Ads, then cuts to staff, cuts to regions, transmits to cities only, more cheap/free content such as more IPA interviews, more Peter Reith and more Tony Jones hosting Peter Reith .. oh and Uhlmann book readings.

    Please may we have more CCZ Statton Equities share tips.

  • 44
    Dixon Vicki
    Posted Monday, 17 March 2014 at 1:11 pm | Permalink

    The privately owned media exhibits a great deal of political bias Look at the endless anti-Labor headlines in the Murdoch press before the last Federal election, Australians would lose our least biased and most trusted media organisation if we lose the ABC.
    The ABC provides information through science programs and in depth analysis through programs like Background Briefing and 4 Corners,
    The ABC provides a magnificently broad range of services for Australians, It is highly unlikely that this would continue if the ABC was privatised.

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