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.
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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.