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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.

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 comments

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

  1. Darwin

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

  2. billie

    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. Bo Gainsbourg

    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.

  4. Karen

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

  5. wayne robinson

    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.

  6. Richard

    Lightweight garbage. Keane’s response destroys this.

  7. 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.

  8. paddy

    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!

  9. zut alors

    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.

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