The ABC's Commercial Imperative

Great work by The Australian this week, in pointing out that the ABC is just wrong wrong wrongity wrong to be wasting money on marketing or in bidding for the rights to telecast major sports events. It’s a big concern for The Oz, judging from their coverage this week, which includes today’s pithy editorial and yesterday’s media exclusive from Sharri Markson. 

It should be a major concern for taxpayers too. It’s our money that funds the ABC. It used to be eight cents a day; I don’t know what the current rate is, but it’s a chunk(1), probably in the same league as what the Carbon Tax was costing us.

The specifics are simple: the ABC spent some of its marketing budget to ensure that its coverage of former PM Gough Whitlam’s passing would be at the top of the Google search results. How dare the ABC flush our money down the drain, just to let us know what it’s spending the rest of our money on? Marketing? Pffft.

Meanwhile, Sharri Markson’s exclusive yesterday was explosive stuff. The ABC and SBS bid against each other for rights to broadcast some soccer games. This single act of absurdity drove the price of the broadcast rights up by $700,000. Communications Minister Malcolm Turnbull has, quite rightly asked for explanations from both networks. I suspect it will be a process story about poor communication, adding weight to recommendations that the two organisations find savings through merging their operations.(2)

Bidding against each other was pretty dumb thing to do, though. It’s like the fifth floor bidding against the seventh floor.  As The Oz pointed out so brilliantly,

Under its business model, the national broadcaster gains nothing of commercial value from investing tens of thousands of dollars buying Google rankings to lure internet users to its news website. Regardless of whether one person or a million people visit the site, the corporation receives its $1.1 billion in government funding. (3)

The amount of funding is uncertain at the moment, as Treasurer Joe Hockey is still playing with numbers prior to the MYEFO, but The Oz have got the concept right. I have scoured the ABC’s Charter (again) and could find nothing to suggest that their funding is in any way tied to how many taxpayers view, listen or log in to their services. In reality, funding for our dear old Aunty seems to have more to do with how much we-the-taxpayers can afford to pay, as determined by Treasurer Joe Hockey and Communications Minister Malcolm Turnbull.

Still $700,000 is $700,000. That’s 0.036% of the ABC’s current funding. Hardly insignificant.(4)

But The Oz doesn’t really care about $700,000 either. They care that the ABC is peeing in the commercial media bathtub by openly competing for audience share.

News Corporation, publisher of The Oz, want Australia’s media playing field levelled and compacted each morning like the pitch at Lords, except flat and more level. News Corp wants go head to head with the ABC in a genuine battle of commercial media-wits, pitting its multiple income streams (cover price, advertising sales, online subscriptions) against whatever the ABC and its beige-cardiganed finance team can find down the back of the couch. It hardly seems fair.

Given the vast array of news services online, however, there is no justification in forcing taxpayers to fund the corporation to operate an online service(5), especially one intent on wasting money to erode the profitability of other news sites.(6)

And this is the crux of the issue: the ABC has deliberately set out to undermine the financial viability of its online competitors, most notably News Corporation. The national broadcaster has employed to an integrated marketing campaign, but not to communicate its programming to the people who pay for it; to threaten the profitability of Rupert Murdoch’s Aussie operation. This is particularly dangerous right now, during this Budget Emergency. If News Corp’s profit slides, so too does the amount of tax it pays to the government…taxes which ultimately fund the ABC. Therefore, the ABC is relying on big tax dollars that News Corp pays(7), just to remain in business.(8)

The Oz suggests, with all the subtlety of V8 racecar on heat, that it’s past time for the government to reassess the ABC as a publicly funded entity and examine if such a beastie is still relevant in Tony Abbott’s Australia of 2014. Today’s editorial concludes:

The ABC began broadcasting in 1932 in a vastly different media landscape. Its outrageous misuse of its budget for commercial sabotage(9)(10) is a sign that the time has come for wholesale reform of its modus operandi, not just tinkering around the edges.

And there’s no better place to leave this discussion than here…except for these important clarifications:

      (1)    Based on a budget of $1.1b, a current population of 23,639,700 and 365 days per year, it’s about 12.75 cents per day per person.  (2)    The ABC and SBS are still separate organisations, and as such, have every legal and ethical right to bid against each other for broadcast rights of whatever they believe will best satisfy their charter to provide “innovative and comprehensive broadcasting services of a high standard”.  (3)    Commercial Value is largely irrelevant to the ABC, as it is the public broadcaster, and ass such, is revenue negative. The commercial imperative is part of News Corporation’s vocabulary.(4)    $700,000 is entirely significant in terms of the ABC’s budget. It would just about pay the salaries of a couple of top line national television presenters...or half a dozen mid level administrators or radio producers or content makers.(5)    There is the ABC Charter, and if The Australian wants to be pedantic, Section 6 of the charter does not specify radio or television either. The fact that an online offering is not specified in the Charter is irrelevant. If, in the view of the Board, an online offering contributes to the ABC’s ability to deliver as per the charter, then it’s a valid service.  (6)    The ABC is not interested in eroding anything. Refer to (3) above.  (7)    The ATO paid Rupert Murdoch $880m early this year. There is still debate over whether global companies pay a fair share of taxation.  (8)    Refer to (3) and (6) above.  (9)    Sweet Baby Jeebus, it’s not all about you!  (10) Yes, I'm wearing my superhero cape: Ms Sarcastic is in the house.

In case you didn't know, the current spin boss at the ABC is Nick Leys, whose resume includes a stint as Media Editor at The Australian, as well as roles as researcher at the ABC’s MediaWatch and journalist with the Sydney Morning Herald. Mr Ley’s replacement as Media Editor  at The Australian is Sharri Markson.