The Role of the ABC


Stephen managed to rattle some feathers over his piece the other week that the case for the ABC may no longer exist in the Internet age. He argued (i) that the ABC, being subsidised, provides unfair competition for others; (ii) that good reporting is a public good but is now amply and independently supplied by the Internet; and (iii) that diversity is important and the ABC’s role in providing that is no longer essential.

While the actual answer would require evidence to adjudicate, there are theoretical counter-arguments to each of these points. I’ll put them here. First, news content is rarely paid for and, instead, is funded by advertising. But advertising lends itself to a lack of independence and also to demographic tailoring. The ABC can provide content precisely that would not be advertising supported. Take The Gruen Transfer as a case in point. Moreover, if the ABC in its subsidised form was crowding out private sources, where are the exits? Instead the mainstream online offerings look remarkably similar and still have persisted. If anything, the ABC is providing unfair competition against independent and new media sources — e.g., Crikey and of course Core Economics. So it is the small that might be the issue rather than the ‘old large media.’ Of course, for this reason, Stephen’s third point might be entirely valid.

Second, do we need the ABC for quality news reporting? Specifically, should it be tax payer funded? Now, here the US is an interesting case. Public broadcasting arguably provides quality reporting and has done so for decades. If anything, it has received a boost from the Internet in terms of reach. So the existence of a public broadcaster is probably crowding out a privately funded, non-profit option. The problem, however, is not whether that is possible but if it is decided that is the way to go, how do you transition to it? Do it slowly and it is hard to encourage donations. Do it quickly to show people what they are missing and so they pony up leaves us without these services for possibly a long time. And in the end, does it really change any set of resource allocations in the economy?

That said, the argument that because of the existence of the ABC, the Government should step in to protect old media seems to me to stand — although here I suggest it is for other reasons. Put simply, the alternative hypothesis is that the ABC is not competing with old media and its continued existence means we do not have to step in to support that media. The ABC’s existence means that the Government should be more vigilant in promoting competition and not protecting established businesses in this industry.

9 Responses to "The Role of the ABC"
  1. Apparently The Australian is losing money. Are you arguing that, for example, that newspaper should be subsidised by the taxpayer, now that the ABC’s Unleashed features News Corp opinionist Glenn Milne, former Australian opinion editor Tom Switzer and former News Corp blogger Tim Dunlop?

  2. First, doesn’t the US government match donations to public broadcasters dollar for dollar?  So they are government funded I think.
    Second, the programming broadcast by commercial broadcasters isn’t their product.  Their product is people’s attention on advertisements, and they sell that attention to advertisers.  The ABC’s product is the programs that they broadcast, so legally the ABC and other broadcasters don’t compete at all, and so there can be no unfair competition if there is no competition.
    The main problem with commercial news content is that there is a strong tendancy to overdramatise in an attempt to get ratings and so provide product (viewers attention) to advertisers.  It is really productionised gossip rather than disemination of facts relevant to people’s lives.  Commercial reporting on boat people is a good example.  The ABC and SBS in such an environment have to also go along to some extent to maintain ratings and justify their relevance.

  3. Who knows what the ABC’s role is now.  It appears that it’s journalistic integrity re the elections has reached an all-time low.  One only needs to read the comments under Scott’s article in “The Drum” to see that people are furious with the biased nature of the reporting.  So much for their charter.

  4. The ABC may have solved the problem. They have started advertising on The Age website, effectively passing on their taxpayer subsidy to the commercial press.
    Why does the ABC need to advertise?

  5. Australian commercial media fails to compete in terms of quality entertainment. It’s just rent seeking on the distribtion of imported content. It is irrelevant for large parts of the population. Let it die already.

  6. @Michael,

    No, you are absolutely wrong. I took the time to check the Nielson ratings for all broadcasters. The ABC channels get a very respectable 25% of the viewers – much more than I thought. (Hopefully I read the figures correctly.) However – excepting SBS – that still leaves 75% or so of the population viewing “imported content”. Hardly irrelevant in terms of numbers. 

    On simplified basis for TV at least. for every 4 viewers, 3 people subsidize the viewing habits of a single ABC viewer. ABC’s total budget is $1.1billion for Australia’s 11.1 million taxpayers, which works out to an annual tax of approx. $100-200 per household. That’s a nifty transfer of wealth for what Auntie’s defenders have generally boiled down to “quality” news and entertainment.

  7. So DP, how does bidding up the price of imported content add value to Australian’s viewing experience? SBS used to screen the program Top Gear which is made in the UK by the BBC. How has channel nine added value by outbidding SBS? The imported programs would probably sell for whatever broadcasting service would be willing to pay for it. What is your understanding of rent-seeking? Do you understand the difference between a property speculator and a builder? If commercial TV wasn’t losing relevance we wouldn’t be treated to the spectacle of ideologues confusing profit and value by arguing that the ABC was unfair competition.

  8. DP,
    You can’t say what the wealth transfer is unless you know who is paying extra tax at the margin to pay for the ABC.   It is plausible that these taxpayers are primarily ABC viewers.

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