Share or merge? Public not well served by an ABC monopoly

By Colin Griffith

Tuesday March 8, 2016


Mark Scott considers himself as a man that like big bold ideas. His enthusiasm for “a friendly merger of ABC and SBS” was presented last month at the National Press Club as just such as big idea, in fact his legacy one. This idea however can been seen as either as a dangerous thought bubble or a magician’s sleight of hand to distract from where people should be looking.

Let’s examine the thought bubble thesis. How can SBS that is now dependent on advertising revenue easily merge with the ABC that is prohibited from this by legislation. Any such change would open the ABC up to the option of introducing advertising via the backdoor through a merger with SBS. The introduction of advertising on its domestic networks would fundamentally alter the distinctive role for the ABC as an independent media service and erode public support and confidence. It would also make it easier for future governments to reduce public funding, given they could argue the ABC should make up the shortfall through advertising. Is opening up this option seriously what Mark Scott wants to leave as his big legacy idea?

“The ABC should be not just a glorious but isolated example of programming excellence but a vital contributor to a wider ecosystem of innovation.”

Another option from a merger with the ABC is that SBS abandons advertising, thus depriving it of over $70 million per year in revenue, an amount that is highly unlikely to be replaced with government funds. The only way to make up for this revenue shortfall is through internal efficiency savings. The proposed sharing of transmission and other back-office services between ABC and SBS has been estimated to only generate between $45 to $61 million per year. This option doesn’t look much better either.

The proposal for sharing back-office services, transmission and online infrastructure between the national broadcasters does have some substance. If these savings are real and bring benefit to both organisations, then they could be achieved without the need for a merger. Lots of government organisations have embraced such sharing arrangements, supported by service agreements that do not require amalgamation.

A more responsive organisation

The merger proposal is also backed by the assertion that SBS programming has become less distinctive, implying that the ABC has become more diverse. No real evidence is provided to back this claim. It would have been more accurate to say that SBS programming has changed a lot from its origins as a primarily foreign language broadcaster. The fact that SBS TV is now broadcasting different types of programs that connect with audiences from second and third generation migrant communities is more a sign of a responsive broadcaster than that of failure.

The flipside of whether SBS is still distinctive, is whether the ABC has successfully embraced Australia’s diversity? The evidence is far more mixed on this front. ABC TV’s schedule is still cluttered with mediocre British dramas, a clear sign the ABC has yet to severe it umbilical chord to the BBC. For years, the ABC was subject to a one-sided production agreement with the BBC that forced them to accept lots of dross along with the best of British programs. Despite some more recent commissioning efforts, the ABC’s television schedule is still dominated by Anglo faces and nostalgic Australian stories.

“The ABC’s television schedule is still dominated by Anglo faces and nostalgic Australian stories.”

The real concern for a merged ABC and SBS is that it would shut an alternative door to commissioning programs and embracing new ideas. Instead of giving program makers two doors to pitch their ideas and stories, there would be only one. This would narrow the diversity of programming, as commissioning editors can be fickle and narrow in their tastes. In recent years, SBS has been the pioneer in supporting and showcasing innovative dramas, comedies and documentaries, especially during fallow periods for programming on the ABC. Keeping two doors open is a far better recipe for innovation and success.

Let’s then examine the other thesis that Scott’s merger proposal is really a sleight of hand to distract our attention. Perhaps the real issue is that the ABC is running on empty, with rising costs and a funding base that is declining in real terms, set against the need to invest in expanding its digital services. Despite the claims of inefficiencies, there isn’t much more fat at the ABC without cutting into programming budgets and output. Scott’s tenure at the ABC must have worn him down having to preside over how to continually trim and finesse budgets just to keep the Corporation operating.

Scott has been incredibly successful in obtaining special purpose funding from the federal government for the ABC. This includes the grant funding for its Asian television service, news and regional programming and education services. He deserves recognition as being the first Managing Director in a long time to obtain such largesse from what are normally hostile political masters. The only problem with special purpose funding is that it eventually runs out and is not part of the core ongoing funding base.

This means that the ABC now has no long term solution to this slow and debilitating squeeze on its budget. It is perhaps only natural that Scott would start to look longingly at the SBS as a means of freeing up extra funds. Despite the problems of such a merger being well known, Scott has chosen to mark SBS as the target for future savings rather the ABC. The debate is now framed around how SBS could migrate onto the ABC’s infrastructure and systems and a merger can only be interpreted as a means to give the ABC control over what and where to cut.

End of the transmission era

Sharing digital television transmission across Australia could indeed free up many tens of millions of dollars annually that could be redirected back into programming and digital platforms. While transmission costs for the ABC and SBS are almost $300 million per annum, closing one network would only decrease these costs modestly due to the high fixed costs for the for the transmission towers and networks. Scott is however astute to lay claim on behalf of the ABC for these transmission savings, as well as the additional revenue that would accrue from selling the vacated spectrum to the telecommunications sector. Whether this argument washes with government is yet to be seen but is well worth a try.

“The BBC is already moving to close down one of its television channels and transition the service to be fully online.”

Perhaps the real sleeper in this debate is that eventually the entire terrestrial transmission infrastructure for television is likely be closed in as soon as fifteen years. As audiences increasingly migrate to on-demand and streaming services delivered via broadband and mobile networks, the rationale to keep funding an expensive transmission system of television towers, antennae, microwave and satellite links will diminish. At the same time, the valuable spectrum that broadcasters currently occupy is in growing demand for mobile services to feed the insatiable demand from the public.

Nicholas Negroponte, over 20 years ago, described this transition as what currently goes over the air (broadcast television) will eventually travel through wires whereas what normally goes through wires (telephony) will go over the air. The British Government estimated their terrestrial television transmission network may close as early as 2030. The BBC is already moving to close down one of its television channels and transition the service to be fully online.

As this transition is made, this will free far more funds for potential reinvestment in the ABC and SBS to support new ways to “broadcast” to the public. The challenge with online distribution such as iView, is that unlike the largely fixed costs of terrestrial television transmission, is that the greater the demand the greater cost.

Monopolies and regional Australia

In his Press Club speech, Scott expanded on the theme that newspapers and regional news cover will diminish in the digital age. The challenges of the major metropolitan newspapers is well known with the question about when not if they cease some or all of their print production. The situation for regional media is more acute, with the dramatic reduction in local news coverage for newspapers, radio and television.

This claim is part triumphalism but also careful positioning for the ABC as the solution for this crisis.

Scott is laying the foundations for increased funding for the ABC to retain and expand its regional news and content production. The argument runs that as regional news coverage by commercial media outlets disappear, then the ABC will retain and enhance its regional news coverage across the corporation’s television, radio and online networks.

Implicit in this proposition is that the ABC has been more successful in innovating and adapting to the digital age than its commercial media peers. While it is true the ABC has embraced and been an earlier adopter of new digital services, this ignores the very different challenges that commercial media companies face. They have had a frustrating time in chasing the shifting and elusive business models that could sustain their businesses as their traditional forms of advertising evaporate. In effect they have had to multitask with both business models and digital innovation whereas the ABC has had the luxury of pursuing just one task.

The trouble with the ABC as the solution for regional news coverage and media diversity is that this leaves the corporation in an increasingly dominant position in the media landscape. When newspapers close their weekday editions, when commercial free-to-air broadcasters reduce their regional news gathering capabilities more, this will leave the ABC as the monopoly provider of local news for many regional markets.

In this scenario, the ABC will be one of the last big comprehensive media organisations left standing in Australia. If so the ABC will increasingly become a target for attacks from its commercial rivals jealous of this privileged position. Rupert Murdoch and his sons have already been running this line of attack on both the ABC in Australia and the BBC in the United Kingdom. We can expect this to ramp up as the commercial media companies move deeper into crisis.

While Scott himself has identified the troubles for the commercial media sector, he has failed to think through the real implications for the ABC and its relationships with its audiences and role in the new digital media landscape. With the prospect of increasing dominance comes the need to change the ABC from a tightly integrated national media network to an organisation that is more porous and open.

Open for innovation

If the ABC is going to be the only mainstream media organisation left standing in some communities, why not share its news coverage and content production with other media outlets, be them commercial newspapers, community radio stations or the growing number of new digital services. The ABC has in the past dipped its toe into the business of syndicating its news content for a very modest return whilst restricting access to community media organisation that were unable to pay. Why not just give its content away for free using an appropriate creative commons license covering attribution and share-alike?

The ABC should rethink how it manages its vast archives that contains the audiovisual memory of Australia. The ABC archives are funded to primarily service internal program makers and make it difficult for the public to access content. The ABC archives should where possible become open to the public to freely access and allow for creative reuse to breath new life into this content. Where the archival content contains external copyright, the ABC should explore innovative ways other organisations could clear and pay these rights-holders.

The have been some attempts by the ABC to be more open. ABC Open is perhaps the best example, where ABC program makers collaborate with local communities to either record stories or invite outside contributions. While ABC Open and other examples have generated some exciting and diverse content, the Corporation has failed to scale these initiatives and allow for permission-less access and innovation by outside content makers.

At a time when funding for and the survival of community media organisations has become increasingly difficult, the ABC could provide greater access to its vast network of facilities and infrastructure such as studios, transmission networks and digital distribution systems.

A merger with SBS is not the route to media diversity and the future of the ABC. The real challenge for the ABC is how to reinvent itself to be become a more open and collaborative organisation in this new media landscape whilst maintaining its independence and trusted role with the Australian community. The ABC should be not just a glorious but isolated example of programming excellence but also a vital contributor to a wider ecosystem of innovation and creative endeavour in Australia.

This then leaves us with what to make of Scott’s legacy idea of a merger. Perhaps it should be simply put aside as a parting distraction from the real challenge ahead of rethinking the role of the ABC in the digital age.

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Laurie Patton
Laurie Patton
5 years ago

Nice work Colin. Perhaps a little generous though. The ABC still has fat to be cut, but that won’t happen until there’s an MD brave or foolish enough to stand up to the senior officer cabal. The real change that is required, which you allude to, is in the part one step beyond the creation and scheduling of content. Combining ‘back end’ functions just makes sense, and I’d suggest a neutral third party organisation plus some strategic outsourcing. As a case study, why was the ABC allowed to build iView and not share it with SBS? SBS then went and built its own version. The taxpayer paid twice!

Christian Kent
Christian Kent
5 years ago

The BBC isn’t closing one of its channels — BBC Three is one of the virtual channels in (one of) its digital broadcast multiplexes. In the context of SBS closing and moving its broadcast to ABC’s multiplex, this is a misleading comparison. The ‘closure’, such as it is, is a relaunch of BBC Three into a section of BBC iPlayer, necessitated by a reduction in new content from budget cuts. The (virtual) channel isn’t even being removed, but being replaced by a timeshift of BBC One, which itself may carry some of the iPlayer content created under the ‘Three’ banner.

So what has been heralded as a paradigm shift from broadcast to online is, in reality, just a production cutback.

Christian Kent
Christian Kent
5 years ago

I’ll also take a $100 bet that the terrestrial digital TV networks (specifically the commercial ones) will still be broadcasting in 15 years, and 20 years. Ten years from now will see the normalisation of 4K, with cheaper larger screens, fulfilling more of Aldus Huxley’s Brave New World; I think it’s more likely in 2025 that the commercial networks will each have a second digital network to transition to DVB-T2 and H.265.

More interesting is the one nobody talks about: the squillions that Foxtel spends on its expensive satellite capacity, rented from Optus. It’s going to become a boondoggle long before the FTA networks consider shutting down terrestrial (especially now that they don’t have to pay for their licences).

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