As incoming ABC managing director Michelle Guthrie gave her first interview last year, she was asked to comment on the prospects of advertising on the ABC. Many of those who love the national broadcaster are incensed at the possibility — but the ABC is already making quite a lot of money out of commercial ventures.
The question was, perhaps, prompted by Guthrie’s background in commercial media. She answered in a way that was less than definitive, leading to headlines that the ABC was considering advertising, presumably in the same manner as that done by the commercial networks. This isn’t, at least in the short-to-medium term, a real risk. Crikey has heard no murmuring of introducing paid advertising within programs.
But the ABC does already conduct a wide range of commercial activities. As Guthrie pointed out, its programs and websites overseas already carry advertising, in a similar manner to the BBC. For now, it owns a range of stores. It licenses its content to others. It publishes magazines, books and music. It has an events arm.
These add up to big money. In the 2014-15 financial year, it generated $155.3 million in “own-sourced income”. That compares to $868.3 million in government funding over the same period, meaning 15.1% of the ABC’s total revenue was from commercial activities, a percentage that has been more or less stable in recent years.
Of the $155.3 million in self-generated income, nearly $8 million came from interest payments on funds and another $28.6 came from “other revenue”, leaving $118.8 million from the “sale of goods and rendering of services”.
Some of the ABC’s self-generated revenues — those made by merchandising, for example — are entirely appropriate and provide a useful source of revenue, says ABC Friends spokesperson Margaret Reynolds. But the viewer lobby group is cautious of the level and effect of the ABC’s commercial activities: “We’ve always argued that the taxpayers of Australia are already paying for their ABC,” Reynolds said. “It’s a public broadcaster and already paid for.”
She also queries the ABC’s role as a local distributor of non-Australian programming. Enter any ABC shop, she says, and count how many of the DVDs sold are for BBC shows. “So my question is, does it go back into Australian programs, or does it go back to the BBC?” (The ABC does not release specific data on how much it spends on programs purchased from others, though has often said such programs are very cost-effective, costing the broadcaster less than programs produced in-house.)
The annual report gives percentages of where the ABC’s commercial revenues came from, meaning we can roughly deduce how much the ABC makes from each of its commercial activities.
The vast bulk of ABC Commercial’s revenues (58.9%, or $70 million) come from retail. Some of this comes from online sales, but the majority is from the ABC shops, which themselves contributed around $60 million. But the ABC announced in July last year these were being progressively shut down. Costs associated with this process meant the division as a whole made a net loss of $30.8 million.
But while the ABC shops will soon be gone, other forms of revenue are growing. Someone wanting to watch Melbourne-based crime drama Miss Fisher’s Murder Mysteries on the ABC’s video-streaming app, iView, won’t get much further than the most recent episodes, but the whole back catalogue is available on Netflix. The ABC forms the backbone of Australian content for the service and also licenses a lot of content to its competitors Stan and Presto.
Last year, for the first time, the ABC made more money selling its content to subscription video-on-demand services than it did in DVD sales, which have been contributing less and less to the bottom line for a few years. The video licensing more than doubled its profits in 2014-15; it now contributes $15.4 million of the division’s gross revenues (the next biggest chunk after retail). Publishing is the next major division, contributing 6.4% to gross revenues.
ABC Commercial’s role, to quote the ABC’s 2014-15 annual report, is to generate “revenue for investment into ABC programming”. Previous annual reports have specifically said net profits from the division go back into programming. It’s also a marketing tool, or as the ABC puts it, provides “a vital role in extending the ABC brand and enhancing audience engagement”. And while this doesn’t benefit the ABC directly, Aunty argues the division also plays a role in paying royalties and advances to creative professionals. It says it paid $13.4 million in such fees in 2014-15.