Last Friday night, I had the honour of hosting a ceremony as part of the ABC’s Mental As week. I am sure you’re aware of Mental As and our involvement with it, as it illustrates perfectly the role of the ABC — engaging the community in an issue of national importance, using its storytelling expertise and cross-platform prowess to explain a complex, contemporary issue. No other broadcaster in this country could even attempt such an ambitious exercise.
Public broadcasting has always aspired to inform, to educate and to entertain. I couldn’t be prouder of how we fulfilled that role last week, giving Australians a chance to talk, to seek and to give, creating a platform for a national conversation around mental health. It was the work of a digital-age ABC, the most comprehensive cross-platform content and marketing initiative we have ever undertaken.
Mental As will have had an impact on millions of Australians who watched, listened and engaged online — and on the nation itself.
That has always been the ABC’s way. Part of Australian life, part of the lives of millions of Australians each week. Something that belongs to all Australians, everywhere.
Our work on Mental As coincided with campaigns around the country over the future of Lateline and other programs. The public response to Mental As and the Save Lateline petitions show yet again the degree of passion the public, the owners of the ABC have for the public broadcaster.
The ABC board acts as trustee for the Australian people who own the ABC. The board is independent and accountable to Parliament for the decisions it makes on how to spend the funds allocated to the public broadcaster, for decisions about how best to fulfil the charter as set out in the ABC Act.
Why is the ABC so widely appreciated by the public in whose interests the board acts? It’s a national asset, long loved and nurtured down through the generations. For the vast majority of Australians, it’s our most trusted source of news. It’s integral to the lives of millions, with over 70% of Australians over 18 using the ABC each week — not to mention the nation’s pre-schoolers for whom bedtime is signalled by Giggle and Hoot.
For all these reasons, when you talk about the prospects of the ABC being changed, and changed significantly, it would be negligent not to talk about the challenges the ABC is facing right now.
If you love and care for the ABC, if you support and want it to remain strong, robust and relevant within Australian life — and if you read the headlines — then you know these are uncertain times for the ABC.
In the face of this uncertainty, the ABC board and its management team remain resolved to secure the ABC’s future in the digital age. For the ABC to be an indispensable element in the lives of millions of Australians and the life of the nation. For it, as the Australian Broadcasting Corporation, to be a place where despite all the international content freely flowing within our media streams, Australians know they will find Australian stories and a national conversation.
Convergence, technological change and new competition continue to create uncertainty everywhere in the media sector.
The ABC also contends with an additional uncertainty, dependent upon funding decisions that are still to be made — or at least revealed — by the government.
Everyone except the cynics would be a little surprised to find the ABC facing this uncertainty.
For decades now, the ABC has been funded through a bipartisan triennial funding arrangement, where three years funding has been committed by the government of the day. This enabled the ABC to undertake multi-year contracts and plan with some certainty, most importantly in program production areas, with a secure income stream.
That security is particularly important to the ABC in that, unlike other media organisations, we effectively have no other way of raising revenue.
We’re now in the middle of the most recent triennial funding agreement, made in May 2013. This agreement still has more a year and a half to run, and it’s very rare indeed for the ABC’s budget to be cut in the middle of a triennial funding agreement.[pullquote] “I don’t need to remind you of the very clear, public and oft-repeated commitment made by Prime Minister Tony Abbott before the election, and after the election, inside Parliament and outside Parliament.” [/pullquote]
I don’t need to remind you of the very clear, public and oft-repeated commitment made by Prime Minister Tony Abbott before the election, and after the election, inside Parliament and outside Parliament. He guaranteed that, in its first term of office, the government would maintain the ABC’s budget.
These are facts that I can report — I’m not going to provide further commentary.
The reality is the ABC’s budget has already been cut this year. And more cuts are on the way.
Earlier in the year, I’d imagined that by the time I’d be speaking to you here at the University of Melbourne, we’d know the future funding position for the ABC.
We are still not sure precisely how much will be cut. We are still not sure precisely when the cuts will become payable. And decisions around size and timing could, naturally, have a material impact on ABC audiences.
I want to pay tribute to our staff. As I have said to them, the very best thing they can do during this period of uncertainty is to do their very best work. And they’ve done it, continuing to be completely professional, dedicating themselves to bringing Australian stories and conversations to Australians everywhere regardless of the climate of uncertainty in which they’ve had to work.
Some commentators have suggested the ABC should stop grandstanding and get on with belt-tightening. The reality is the ABC has already been belt-tightening, and taken steps to deal with what amounts to a $120 million funding cut over four years.
In the May budget, the government introduced the somewhat novel concept of a “down payment”. This “down payment” came in the form of an extraction of funds from our triennial funding settlement — a 1% cut to base funding and the termination of the Australia Network contract, which still had over nine years to run.
ABC International has been forced to downsize and more than 80 people have left the ABC as a result — many great talents are now lost to us, over a thousand years of experience has gone out the door.
The challenge was not helped at all by the fact that compensation provided by the Department of Foreign Affairs and Trade for terminating the contract fell short — by more than $5 million — of the actual costs of termination.
We have also taken steps to deal with the first tranche of the $40 million base funding cut. No one’s procrastinating.
Now, “down payments” normally provide some notion of rights for the payee about when and how the final payment will be made.
But not so in this case.
The final strategy for dealing with the funding cuts will have to be determined by the board and executive once the size of the cut and the repayment timing is known. Obviously both will have a significant effect on the decisions that must be made.
And since rumour loves a vacuum, while we’ve been waiting for the government to reveal just how much more they want back from the ABC, some of the ABC’s critics have taken this opportunity to step up and offer us helpful guidance on where cuts must be made, while ABC supporters have been telling us where they must not be made.
We’re hopeful that this will, finally, be resolved soon.
In the meantime, we continue to develop a range of options to deal with what we do know, and contingency plans to deal with what we don’t. And while I’m not able to deal with specifics tonight, I do want show you how we’re thinking through the considerable challenge.
ABC has not just been “committed” — as they say in Utopia — to greater efficiency. It’s actually been delivering on it. Continually.
You only have to look back to 1986/87, when the ABC consisted of just 1 TV channel and Triple J was Sydney only. When there were just 38 local radio sites, plus two national networks — ABC FM (now Classic FM) and Radio National.
Just over a quarter of a century later, in 2013/14, there are five ABC TV services — 1, 2, 3, News 24 and iView. Five million pages of ABC Online. ABC Open. ABC NewsRadio is another national radio network as is Triple J — along with its new digital sisters, Double J and Triple J Unearthed. Local radio in 60 sites. Podcasting. ABC Jazz and Country also in digital. More than 30 smartphone and tablet apps with around 2 million users each month and the ABC Flagship, Radio and iView consistently top of the charts for both App Store and Google Play.
Now most of these popular, valued and very widely used new services were achieved with efficiency.
By doing more with less. A lower budget in real terms and more than 1400 fewer staff, in fact.
So efficiency is not some novelty to the ABC — it’s in the organisational DNA.
It was through investing efficiency savings in innovation, that we were able to create the ABC as you know it today — a successful, digital age ABC. And while some clichéd portrayal of the ABC as inefficient — often the last resort of critics and commentators to whom the very word “public” is immediately suspect — it’s a portrayal that has far less traction with the Australian people, 84% of whom say they regard the ABC as valuable or even highly valuable.
In a recent blog post, Communications Minister Malcolm Turnbull said that for the ABC in facing budget cuts, “the harder but better thing to do is to restructure, reform and modernise the business”.[pullquote] “I hope his [Malcolm Turnbull’s] insights into the ABC extend to how much we’ve achieved over these years, through efficiency and being audience focused …” [/pullquote]
I know the Minister is a fan of the ABC, a keen listener and viewer, and certainly a ubiquitous presence on our platforms. But I hope his insights into the ABC extend to how much we’ve achieved over these years, through efficiency and being audience focused, that has made the ABC a truly innovative and contemporary public broadcaster.
Of course every media organisation has been required to push for efficiencies and reform or reinvent its business practices and the ABC is not exceptional in this. However, this reinvention is a virtuous story at the ABC, as it has delivered more programming on more platforms for our audiences and genuine industry-leading innovation, for fewer public dollars, with fewer people.
We know there’s great public appreciation for the ABC having leveraged its multi- platform expertise to increase productivity and output to match the growing, changing demands of audiences.
Those audiences want the ABC to get the best out of television multi-channeling by offering a range of specialised services across the network. So too with radio — giving listeners apps, digital radio stations and more personalised programming. People want the ABC to use its online expertise to maximise content choices for consumers.
The Lewis Review of the public broadcasters, commissioned by the Communications Minister, was never intended as a means of proposing a savings target or even as a detailed, prescriptive “how to” guide. The Communications Department offered it as a range of suggestions for further investigation and detailed examination.
And that’s exactly what we’ve been doing since it was delivered. Further investigation and detailed examining because, just as the ABC Act demands, the independent ABC board is expected to decide how the ABC is run and its funds are spent — not the government, not its advisers.
But I promise you this: the board is already finding and will continue to find more efficiency savings. We were already in the process of implementing some of the Lewis recommendations prior to receiving them. Others, relating to property and procurement, are now underway.
Our aim always is to protect audiences and content from these changes as much as possible. And many efficiency changes we can make will definitely be invisible to audiences — new, more efficient backroom technology, changes in the ABC’s property footprint, layers of management and procurement contracts.
But — and it’s a big but — there are a number of immutable riders to that strategy. They’re not raised as debating points or bargaining chips but simply to highlight some of the realities of the media business.
For instance, as the Lewis Report indicates, transforming the operational base of the ABC brings with it a number of significant complications. Time lags in the implementation of some measures; high upfront costs, particularly our redundancy responsibilities and costs, in relation to others.
So while we’re following the timetable anticipated by the Lewis Report, if the government refuses to fund those transition costs, then it’s going to be some time before any savings can be realised. Meanwhile, the only alternative will be to cut content dramatically.
For every problem, there is often a solution that is simple, neat and wrong. It’s tempting to believe there might be some magic formula. The mythical “backroom” solution, for instance, where large savings can be ripped out of a media organisation while content remains untouched, suggests binary decision-making, some separation between two fields that simply does not accord with practice in any organisation.
Of course we want to focus on support services to make efficiency savings. But the vast majority of the ABC’s budget — apart from transmission — is related to the making of content.
To find substantial savings, you need to look at all parts of your operation. The Lewis Review had specific content recommendations out of its scope, but some of its efficiency recommendations around production facilities go centrally to what programming you can make and where. The way you make content affects the content you make.
We know there are cheaper ways of doing things. The ABC makes lots of content that would make little sense to hard-nosed accountants or those simply using the criterion of efficiency, without considering other criteria like effectiveness, or impact, distinctiveness or public value.
Comparisons with commercial media organisations, motivated not by public interest but by private profit, are not entirely appropriate to the ABC. One example. Commercial media businesses are able to write off massive structural transition costs in reduced earnings, while the ABC cannot. These are real costs to us which have to come from within existing funds.
So we will pursue efficiency as best we can. We will look to find as much as we can in support services. We will try and limit the impact of efficiency savings on content and preserve the distinctiveness of the ABC’s offering to audiences.
Future audience focus
But this is not the end of the content question, particularly if you want to secure the future of the ABC. We are determined to remain an audience-focused, content-driven media organisation.
We want the ABC to be the home of Australian stories and conversations — not just on the platforms that have dominated the past, but on the platforms that will be central to the future in an online and mobile world.
The provision of digital media services is spelt out as a responsibility in the ABC charter — added in recent years with the strong bipartisan support of both houses of parliament.
Most of the great digital transformation of the ABC over the past decade has been funded by efficiency savings found by the ABC.
Look at iView, News 24 and our digital investment. Or ABC Online, a pioneer in the online space going back to 1994. The ABC took the first forays into these digital spaces because it was charged with a charter responsibility to be bold and innovative, and because it was able to put audiences, rather than profits, first.
iView — indisputably the industry’s best catch-up service — has been a game-changer, showing Australia’s commercial TV sector how to cater to audiences impatient with appointment viewing and fixed screens in living rooms. For many of our viewers, including the many Peppa Pig fans in this theatre, it is a vital platform in its own right.
News 24 has been similarly pioneering, not just for its ability to seize the opportunities of multi-channeling to offer a truly local television 24/7 news service. News 24 is now the destination of choice whenever there are big, unfolding news breaks — on television, online and on mobile.
But the news channel is also transformational in that it has driven the ABC’s integrated, multi-platform approach to news.
By reorganising our newsrooms to meet the realities of convergent media, ABC News now offers up-to-date, quality coverage across radio, television, mobile and online.
We have reinvented our news gathering operations to deliver much more content across all platforms far more efficiently. That’s quality investment delivering quality results — exactly as the charter envisages. And the audience wins — with nearly 4 million Australians tuning in each week.
The ABC would be much poorer without this digital investment — and much weaker. Without the savings we found, funding the investments we made, the ABC would be a public broadcaster in decline. But instead it remains vital, still significant, still relevant, though challenged by the changes pressed on us in this new media landscape.
It is impossible to overstate just how disruptive the digital era has been for media organisations.
The landscape is littered with casualties, companies that thought they could withstand the impact of convergence; that tried to ignore the rise of new competitors and more fickle and demanding audiences; that failed to reinvest appropriately in new content and platforms that would ensure relevance and reach.
Look at how much media use in Australia has changed in just over a decade, how rapidly Australians have moved to online and mobile.
In 2002, 8 million Australians were online, 5% of them with broadband. In 2014, 17.5 million Australians are online and 90% of them have broadband. In 2002, Facebook had not yet been launched. Today 11.3 million Australians are on it. In 2002, 17% of Australians had a mobile — no one had a tablet. Now 70% have a smartphone and 47% have tablets.
iView has grown to now be delivering 20 million programs a month — most on mobile. It’s an online, mobile Australia — and that’s the Australia the ABC needs to be serving.
Every media company is finding funds for online and mobile investment from within, and often from content areas.
The New York Times, for instance, recently announced it will cut 100 newsroom jobs, redirecting the money into new digital projects. The BBC has flagged it will shut down one of its TV channels, having decided it can better deliver the content online.
In Australia, the challenges and opportunities of the new era are shifting and reshaping business relationships. Former intense rivals, Fairfax and the Nine Network, are now working together on a new digital streaming project.
The status quo is no longer an option. Witness the fate of CNN, the pioneering global news channel. It appears that Turner Broadcasting, CNN’s parent, is preparing to slash its total workforce by 10%, with CNN alone shedding more than 300 staff through buyouts or layoffs.
Unlike the BBC, to which it is so often compared, the ABC has always operated within the context of commercial competition. It began in radio alongside commercial operators and it found its feet in television next to commercial broadcasters.
Obviously, online — the only truly international competitive arena for Australian media — the ABC has always gone head to head with a vast range of local and global competitors.
The ABC has survived in this mixed media ecology by paying attention to the outside world and by adapting. Its operating model and its production systems have evolved over the years and will continue to evolve in future. Change has been a positive force for the Corporation, inspiring greater productivity, ingenuity and creativity.
In looking at the economics of television production, it was both prudent and creatively sensible for the ABC, to shift from internal to external production, where we can get up to treble the value of each ABC dollar spent on-screen.
In the last three years alone for instance, in Western Australia, South Australia and Tasmania, we built up a commissioned production budget of $63 million that was leveraged off ABC TV’s contribution of $22 million.
The ABC board is asked to ensure that the ABC performs efficiently with maximum benefit to the people of Australia — and its success in doing that with TV production has delivered a range of great programs such as Wastelander Panda, the multiplatform iView commission, those “only the ABC” shows such as ANZAC Girls and The War that Changed Us, along with diverse commissions like Tim Winton’s The Turning and indigenous works such as Outside Chance and Flash Black.
We continue to look at the ABC’s current content spend to find where funds might be saved, freed up to reinvest where we know it’s most needed—the most competitive media space of all, online and mobile products and services.
We will have to spend less on television and radio to spend more on online and mobile — not just in content, but on the capacity to deliver the services demanded.
We know that to flourish within this space, we need to play to our strengths — iView, ABC News online, Triple J, and ABC Kids.
We know we have to make our sites a better fit for mobile phones — easier to search, easier to serve content audiences want, when they want it. Apps need to be developed and more quickly updated.
The user demands a seamless, intuitive experience. And in delivering all this, we are competing against some of the most wealthy and innovative organisations in the world.
I should add that this is not a “youth” strategy — this is a future strategy. Just look at online figures for Australia. Nielsen’s tells us that while 81% of Australians are online, 33% of them are 50+, 17% are 60+ and growing every day. The greatest growth in smartphone use is in people 55-64, and now at 53%. You can forget about the ABC leaving an audience behind — we’re going with them!
This digital and mobile investment strategy is being used by every media organisation determined to secure its future position, its relevance and value to future audiences.
In the past, efficiency savings have allowed us to meet emerging audience content demands. In future, that source of innovation funding will not be available to us — we’ll have to return those efficiency savings to Canberra. And that’s a very real opportunity cost for a media organisation which is charter bound to be innovative.
What options do we have, therefore, to meet this reinvestment challenge? The funds must come from elsewhere within the organisation, particularly content.
The ABC has long been on this journey of transformation, adapting and evolving as audiences and technology have changed. The journey has to continue, and I assure you it will continue, even if the original means of funding is taken from us.
We know that in securing its future, a lot about how the ABC currently operates and delivers will also have to change. Today’s ABC, as I’ve shown, is a very different one from the ABC which was incorporated back in 1983.
For example, it seems likely that much of the technology we now need to play out our services can be migrated to the cloud — which will certainly cut down some major capital costs.
The rise of fast-speed broadband and new generation mobile phone technology is offering new distribution possibilities, as we are witnessing with the popularity of iView and our radio streaming services.
As distribution costs come down (hopefully) the ABC will be able to use these new distribution methods to offer more personalised, interactive and better targeted content to audiences.
It’s possible that distribution breakthroughs will open up other efficiency options. The Minister for Communications has indicated he will help facilitate new compression standards that will enable television broadcasters to move beyond existing spectrum limitations. More flexibility is also being offered in the way broadcasters use existing spectrum.
But it’s some time off yet. The ABC will obviously want to look closely at its future transmission distribution across the existing poles and wires and across online to determine the best, most efficient spread for audiences. We may, like other broadcasters including the BBC, rationalise our channel offerings on the terrestrial system. The shift will need a careful assessment of the transferal cost — after all, there is no marginal cost in extra TV or radio viewers but each extra online user does mean an additional cost.
Transmission reforms require legislation, the involvement of agencies like the Australian Communications and Media Authority and commercial considerations. Current modeling from the Department of Communications tells us that options such as consolidating transmission with SBS are complicated and not immediately achievable.
When implemented, the major savings would only be realised at the end of the decade. It does nothing to solve either the government’s financial problems or our own. It doesn’t offer a means by which we could fund an online and mobile investment demand that is current and pressing.
The one option we will not be considering is to shut down investment in online and mobile. Close iView. Turn off public news online, or stop streaming it to mobiles and tablets.
This option, if I can call it that, is based on the premise that removing the ABC from the Australian digital media space will mitigate the problems of commercial media.[pullquote] “As Malcolm Turnbull has pointed out, there may be a number of reasons for the woes of News Corporation and Fairfax, but the existence of the ABC is not one of them.” [/pullquote]
It’s a flawed premise. As Malcolm Turnbull has pointed out, there may be a number of reasons for the woes of News Corporation and Fairfax, but the existence of the ABC is not one of them. The problem is not that they don’t have enough readers, but that they don’t have enough revenue.
There are some who would simply say, let the ABC gradually weaken. Let it simply be an old-style terrestrial radio and television service, leaving the new digital world to others.
They claim the ABC should respond to cost-cutting by stepping back in time, retreating to the mid-1980s in output and platforms. This would serve no public interest, but would short-change the very people the ABC is meant to serve.
The “downsize the ABC” protagonists, such as the Institute of Public Affairs and Senator Cory Bernardi, are wrong on many levels. Wrong in suggesting that such a retreat would solve the problems of commercial media organisations. Wrong in suggesting the public wouldn’t notice any difference if the ABC was removed from the digital space. And wrong in thinking the ABC board — trustees for the Australian public — and the ABC management team are not passionately committed to securing a compelling future for the public broadcaster, not just a glorious past.
The responsibility now rests with the ABC board to ensure the ABC is as relevant and respected in the future as it has been in the past — and to find the funds from within to invest appropriately to secure that future.
The tradeoffs and choices are never easy.
I once worked in education. My experience there was that people thought there were real problems with the education system, but by and large, thought their own kids’ school was terrific.
Similarly, nobody believes their own favourite ABC programs are dispensable. If there are to be cuts, they really should be to the programs we personally don’t listen to or watch.
In thinking through our content and investment priorities, we will put our audiences first. We’ll provide content that engages them, but also meets the public broadcasting remit of being high quality, distinctive and as much as possible, Australian.
Being unable to finalise our plans is frustrating for the board and executive, and particularly frustrating for our staff. I believe we’ve been very patient and I’m sure you can forgive us, five months down the track, for wanting some certainty.
The ABC set out on the search for efficiencies a long time ago. The review commissioned by the Minister was simply one more step down a road we’ve long been on.
As the government considers the ABC’s funding future, I hope they also keep in mind the incontestable fact that the ABC is the most trusted and respected media organisation in the country.
Of course, whilst that trust has stayed high, as a reward for its impartiality the ABC has, just as you’d expect, been in and out of favour with every government.
But perhaps one of the greatest lessons of the ABC’s history is that while governments have come and gone, public affection and respect for the ABC has lasted and prevailed.
The government faces many demands on its budget, and difficult decisions. Yet, as there is no doubt where the owners, the voters stand when it comes to #ourABC, the decision about the future of the ABC should be one of their easier ones.
This is an edited transcript of a speech delivered by Mark Scott at the University of Melbourne on October 13