The ABC’s retail arm, ABC Enterprises, is doing so well Crikey is speculating on whether it should be floated?

The ABC may not dominate the ratings in TV and radio, but the national broadcaster’s retail division is going from strength to strength.

Robyn Watts, the head of ABC Enterprises spoke to Mediaweek this week and explained the various arms of the business which includes ABC Retail, ABC Resource Hire and ABC Consumer Publishing and Content Sales.

The three businesses have a projected turnover of $125 million in 2004/05 with a budgeted profit of $17 million that will be returned to the ABC to go back into program making for radio, television and online.

With results like these you’d think maybe they should float the business, especially in the current environment of booming IPOs and a record high for the stock market.

However, Watts notes that ABC Enterprises is governed by the ABC charter and is therefore unlikely to be able to compete with commercial organisations in a major way. But with Senate control from next July, the Government could just change the charter. Besides, ABC Enterprises is already partly privatised because they have extensive distribution agreements with the likes of Village Roadshow.

The ABC is also the only public broadcaster in the world that has a retail chain, said Watts. The BBC has a few retail outlets in the UK, but nothing like the ABC’s retail chain, which consists of 41 ABC shops around Australia plus another 84 ABC concept shops operating within bookshops and newsagencies. Imagine what Gerry Harvey could do with that!

Watts said the success of ABC Enterprises relies on the equation that people watching the ABC value the programming to the extent that they want to buy off-screen associated products. The Crikey kiddies enjoyed a Wiggles book this evening, and they don’t care where we bought it from.

If you want to join the campaign to privatise ABC Enterprises, email [email protected] with suggestions as to how or when it could be done.

Why floating ABC Enterprises is a stupid idea

ABC veteran, Quentin Dempster, writes:

Crikey,

You’re no merchant banker mate.

ABC Enterprises’ $17 million profit becomes almost nothing if the ABC Shops and Centres are floated. The new entity would have to pay for advertising its wares plus full costs for rights for products created from ABC programming if the business ceased to operate under the ABC Act.

The only reason ABC TV and Radio can run free ‘ads’ for ABC products at the moment is precisely because they are allowable under the current ABC Act. The Act allows ‘announcements’ for ABC activities but explicitly prohibits advertising. Sell it off and that ceases.

The ABC Shops and Centres are a success because, as Enterprises people tell me, the ABC is trusted, particularly with the pitch to customers that all profits go back into the ABC for program making. Destroy that trusting relationship and the business plan is stuffed.

If the Howard Government wants to amend the ABC Act to allow advertising on ABC platforms it will face the full wrath of Packer/Murdoch plus Nine/Seven/Ten and all other television, radio and online operators currently competing for advertising revenues.

To public broadcasting advocates ABC Enterprises can be a danger to our editorial independence as some programming (cooking and kids shows etc) can be bankrolled by Enterprises solely on the product sales (books, DVDs, CDs) to be derived. This can be the commercial tail wagging the dog. Programs should be commissioned because they are good innovative ideas which take broadcasting further than the commercial broadcasters will ever dare go and not because a program idea is bankable.

Come the media shake-up after July 2005 we fully expect the Howard Government and its Senate majority to attempt to destroy the ABC by further marginalising its role, funding, charter and functions as News Corporation has consistently urged.

Those of us who want a non-commercial independent mainstream public broadcasting system to survive in Australia are now preparing for the battle ahead. Stop trying to divert us with your hair-brained schemes.

Quentin Dempster
A self-appointed public broadcasting advocate

More feedback on floating ABC Enterprises

Following our harmless observation that ABC Enterprises was a thriving business which could well be floated on the stock market, a number of subscribers have written in to tell us why we were wrong:

I would say if it’s privatised, then it’s not part of the ABC anymore and can’t advertise its products on the ABC – thereby evaporating the retail chain’s free ads and tie-in marketing (like the show, buy the DVD) and it would no longer be profitable. Otherwise why should the ABC favour one private retail outlet over another in terms of its ad buy?

Why is it that the profits are privatised and the losses socialised? What’s the problem with the ABC running a retail chain?

Another writes:

Why the f*** would you want to privatise something that is delivering money to our grossly under funded ABC? Perhaps you should read article 2 in the very same Crikey sealed section in case our biggest “capitalist” should get his hands on it.

“In addition, Packer, Australia’s richest man, has a reputation in his homeland for using offshore tax havens to avoid the tax burden borne by ordinary Australian people.”

And another:

Just a brief email to let you know that despite the fact that I liked the overall gist of your article on the ABC shops. It doesn’t mean that it should automatically be converted to some commercial company. It works well, it ain’t broke! don’t fix it. The cuts that the Liberal governments have made over the last 7 odd years to the ABC mean that they NEED that revenue to go back into the ABC.

I HATE large corporations/companies, and I hate crass commercialisation of everything! It is just the WORST thing you can do to any country, community – whatever…

Bad Idea.

CRIKEY: All very good points, but it’s fun to stir the pot every now and then isn’t it? Meanwhile, Watts is looking out for a fourth arm for ABC Enterprises that could generate a whole new revenue stream.