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TV & Radio

Mar 13, 2014

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.

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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.

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44 thoughts on “The ABC is efficient, but we shouldn’t fund it

  1. PDGFD1

    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.

    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’?

  2. Ken Lambert

    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..


  3. Brendan Jones

    “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.

  4. BSquaredInOz

    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.

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