‘Lack of a level playing field’: Media companies submit to ABC and SBS inquiry
Yesterday afternoon, a number of submissions into the competitive neutrality inquiry into Australia's national broadcasters were published. Mumbrella's Zoe Samios and Paul Wallbank unpack some of the lengthy entries and look at the recommendations proposed.
The government inquiry into the competitive neutrality of national broadcasters ABC and SBS has published a number of submissions from rival media companies.
Born out of a deal between One Nation leader Pauline Hanson and Prime Minister Malcolm Turnbull’s government, which was made to pass the media reforms bill in September last year, the inquiry focuses on a number of areas.
Specifically, the inquiry is focused on the application of competitive neutrality principles to business activities of the two public broadcasters: the ABC and SBS.
Media companies, scholars and organisations have put their thoughts, arguments and recommendations forward as part of the inquiry. Of the 139 submissions made to the inquiry online, 38 did not give permission for the submission to be made public, and 25 requested anonymous publication. Among those made public were submissions from SBS and the ABC. Both reject claims that they are competitors.
ABC outlines its commercial activities are governed by the commercial neutrality policy, and echoes managing director Michelle Guthrie’s comments to the Melbourne Press Club on not being a market failure broadcaster.
The ABC has warned about using the inquiry for matters not relating to ‘competitive neutrality’
“It has been suggested that in order to be consistent with competitive neutrality principles, the ABC should only deliver content that cannot be easily provided by the commercial and community sectors, i.e. that it should function solely as a market failure broadcaster. This position is inconsistent with the proper understanding of competitive neutrality policy and the public purpose charter obligations of the ABC.”
The ABC warned about using the inquiry to protect challenged business models and suggests others might be using the inquiry to reframe “unrelated complaints” under the guise of competitive neutrality.
“If this happens, the main losers will be Australian audiences,” the ABC says.
Both the ABC and SBS cited the restrictions of their charters, with SBS describing them as a competitive disadvantage.
SBS describes its restrictions as a competitive disadvantage
“SBS is dwarfed by substantially larger domestic operators who have up to four times its scale and market share, in addition to the increasing number of global entrants who are heavily influencing the domestic market,” SBS says.
“With limited funding, SBS does not have balance sheet scale for capital and debt leverage to compete with its commercial counterparts who, due to their Australian Stock Exchange (ASX) listed shareholding or foreign-owned capital base have significantly more leverage and agility to make longer-term larger-scale content acquisitions. SBS is also unable to freely take on private debt. The average content budget of an Australian free-to-air commercial operator is six times as large as that of SBS.”
SBS – which receives a portion of its funding from advertising revenue – also notes that it has a ‘tiny share’ of the advertising market, representing 2% of the $3.7b free to air linear TV advertising market.
But outside of the national broadcasters, what do other media players and organisations say? The following is a summary of some of the major submissions.
News Corp
The News Corp Australia submission claims the ABC and SBS charters are out of date and argues that, as a result, there is a “lack of level playing field” in the distribution of news content online. According to News Corp, public broadcasters – which can now be described as news publishers – are advantaged due to taxpayer funding models and out-of-date charters which require review in the digital context.
News Corp’s submission also makes reference to the advantageous position of public broadcasters in the commercialisation of broadcast news, pointing out the fact ABC and SBS do not have to receive any return on taxpayer funding to sustain a news content business.
The submission also talks about SBS and ABC’s use of digital platforms to distribute content without revenue implications and opportunity cost. It criticises the ABC’s use of digital advertising to promote articles, pointing to the $1.4m it spent on Facebook advertising and $440,000 on Google AdWords in the last year.
“We query the need to amplify news published by public broadcasters given that these news stories would be discoverable in search results in the usual course of searching,” the submission says.
“We also observe that the AdWords seem to cover what the ordinary person on the street would expect a public broadcaster to be reporting about on any given day of the year including around Federal Budget time.”
Another criticism was of the ABC competing with Australian news channels in tenders. Overall, News Corp is calling for regular reviews of the ABC and SBS charters, calls for the redefinition of how the charter defines broadcasting services provided by community and commercial sectors, consideration of services provided by the commercial sector to SBS charter.
It also calls for a ban on public broadcasters competing with commercial news services and recommends the need for a panel to consider appropriateness of AdWords and Facebook advertising by public broadcasters.
Kinderling Kids Radio
Kinderling Kids Radio is an independent digital radio service, targeted to children aged zero to seven years. It was launched in 2015, ahead of ABC Kids Listen. Kinderling Kids Radio points to a specific interaction between itself and the ABC.
It looks back at when Kinderling Radio heard ABC was contemplating launching a digital kids radio service in market. The submission outlines Kinderling Radio’s attempts to engage the ABC and discuss partnerships as well as find out more information. But despite attempts and promises from the ABC that its investigations were “exploratory”, targeted at a different age range, and that the ABC would not focus on family co-listening or parenting, the ABC went ahead with the launch of their platform in 2018.
Kinderling Kids Radio argues despite promises made to its founder, Evan Kaldor, by the head of ABC Radio, head of content and digital strategy (radio), the ABC’s new platform copied Kinderling’s strategy directly, launching a service for children aged zero to five, using similar language and market positioning.
It argues ABC Kids Listen programs 100% of music from owned and controlled ABC recordings, while Kinderling has had to license and acquire content, which is a much more expensive exercise. The company has questioned whether the ABC pays less for license agreements as a result of government ownership or whether it has been granted different rights because it has no need for commercial return.
It added ABC Kids uses the full ABC platform – namely advertisements on ABC2, display ads on iview and ABC Online – to promote its product. Kinderling Radio cannot do the same. Other issues include paying talent versus using existing talent, and the fact the ABC enjoys an “undue advantage” in that many of ABC Kids Listen costs are “masked by government ownership”.
“Based on Kinderling’s experience of ABC Kids Listen, Kinderling see the potential for a troubling precedent – a start-up decides to test the market for a new media space. The public broadcaster watches,” it says.
“The ABC appears to allocate a small innovation budget to its new project but this masks the true cost of its content and advertising budgets, which cannot be matched by a startup. The public broadcaster adopts the same or similar format and enters at scale supported by a deep library of content and a substantial marketing machine. The public broadcaster has tremendous latitude based on the absence of an imperative for a commercial return. The ABC wins the space and takes all the audience.”
Stan
Stan is a subscription video on demand service, run as a joint venture between Fairfax Media and Nine Network. Stan’s submission argues national broadcasters like ABC and SBS overlap with commercial operators, adding they have an advantage over others particularly in content acquisition markets. It argues that on-demand applications such as ABC iView and SBS On Demand overlap with the likes of a commercial players such as itself.
It also points to the commercial partnerships ABC and SBS have established with global streaming partners. Here, it argues global partners have benefited from government funds and in turn have reduced the cost of content rights.
MEAA
The Media Entertainment and Arts Alliance is a trade union and organisation for the media, entertainment, sports and arts industries. It has described the inquiry as investigating an “ill-articulated” problem. The MEAA argues that the inquiry is premature, given threats such as Facebook and Google have not been properly assessed.
The MEAA has said it does not believe ‘business activities’ carried out by the national broadcasters have little or no regard to principles of cost efficiency or full-cost attribution. It also said it was not aware of commercial media sector’s activities being displaced as a result of the operations of ABC or SBS.
With regards to the movement towards digital, the MEAA said it was fundamental the national broadcasters adapt, but said it did not equate to acting improperly or in a way which was “designed to cause hardship to competitors”.
The MEAA said it was “satisfied” with current compliance and reporting requirements for both broadcasters, but said it would like to see more detailed reporting on how much Australian content ABC and SBS produce each year.
It described the idea of constraining national broadcasters from using technology which encourages access to platforms as “absurd”, adding there was no public utility in these constraints.
“With all due respect to the panel members on this inquiry, MEAA believe that competitive neutrality principles, which have largely fallen into disuse in the past ten years, are a virtual Trojan horse through which the Government can mount further attacks on the ABC and its employees,” the submission says.
“Meanwhile, the progressive failure by government to modernise broadcasting regulation to suit the digital era continues. For as long as this situation prevails, all producers of content in Australia will be fighting with one hand tied behind their back, revenues will continue to fall and the alarming trend of job losses will continue.”
Screen Producers Australia
Screen Producers Australia is an organisation for the Australian independent film and television producers. The Screen Producers Australia submission argues ABC and SBS have a “disproportionate” influence on market, with regards to commissioning of television programmings. It makes reference to a Deliotte Access Economics survey, which suggested ABC and SBS commissioned 46% of all productions in 2017.
It says commercial broadcasters and public broadcasters have come under pressures due to deliver advertising revenue and audiences, in the wake of the rise of Google, Facebook and Netflix. This has resulted in broadcasters requesting more rights for less money.
“Without government intervention, the market structure and current market conditions will continue to disadvantage Australian producers to the benefit of either international competitors who operate in more favourable market conditions or broadcasters who commission content from producers. This will in turn, disadvantage Australian audiences through a lack of diversity in quality Australian programming,” the submission says.
“The key to a strong Australian production sector that supplies the market is producers’ capacity to retain the intellectual property in their productions and leverage this through international trade.”
To resolve this, Screen Producers Australia suggests legislation which would set standards for contracting between producers and broadcasters.
Other suggestions include a focus on ensuring expenditure by ABC and SBS is made on Australian content, either through a quota, tied funding, a statement of Ministerial Expectations or regular market forecasting. This specific recommendations stems a number of factors, namely a reduction in drama and children commissions by the ABC, and a lack of children’s programming at SBS.
“To ensure a vibrant, diverse independent sector that provides healthy competition and investment certainty, the public broadcasters have a significant role to play. It is clear that absent any specific obligations to Australian content, the ABC’s output is on a downward trend for drama and children’s commissions, while it invests more in other, less-expensive genres. The SBS is investing more in Australian drama, albeit off a low base. Children’s programming is also falling at SBS,” the submission says.
It also suggests the government should extend local content obligations to new media and streaming services.
Free TV Australia
The document submitted by Free TV Australia both recognises the ‘highly relevant’ existing charters of the ABC and SBS, and makes note of SBS’ departure from its ‘core constituency’ and ‘charter-aligned content’.
Its focus is on SBS TV – which includes SBS On Demand – arguing that in pursuing commercial outcomes, it has driven program scheduling away from its role. It notes a Free TV independent analysis of the top 50 shows on SBS One, Viceland and Food Network from last year.
According to the study, conducted by media law academic and former ABC executive Dr Murray Green, 52% of SBS One’s content, 58% of SBS Viceland’s content and 66% of SBS Food network were not charter aligned.
It argues that SBS is competing against commercial rivals in ways that weren’t intended when the broadcaster was established in 1991. It also points out national broadcasters have no Australian content or local programming obligations, a less rigorous code approval process, have separate budget allocation for transmission costs and don’t pay for spectrum.
Among Free TV’s recommendations are a reaffirmation of the role of national broadcasters, a requirement that the ABC and SBS to contribute to the cost of operating and maintaining transmission sites. It also suggests annual competition and charter reviews by the Australian Communications and Media Authority (ACMA) on performance of national broadcasters, along with the requirement of a report on how they took account of the commercial sector in the last 12 months.
It also makes a specific note of SBS, arguing the broadcaster should be required to recognise the services already provided by commercial sector, given ABC is already required to do so. It proposed a new reporting regime, which would allow for transparency in how national broadcasters take account of services currently provided by commercial rivals. It also suggests the government look beyond the triennial funding model to ensure national broadcasters can plan for the future.
Correction: Mumbrella initially reported the Australian Competition and Consumer Commission was conducting the competitive neutrality inquiry into the ABC and SBS. This is incorrect. The government appointed an ‘expert panel’ to conduct the inquiry. More information can be found here.
topics
ABC
competitive neutrality
FreeTV Australia
inquiry into competitive neutrality of national broadcasters
Kinderling
Kinderling Kids Radio
MEAA
News Corp
News Corp Australia
SBS
Screen Producers Australia
Stan
Working in media, perhaps I have a bias however, above all media I value the ABC and SBS and am very uncomfortable with the idea of any government restricting or directly controlling either one.
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How can the ABC and SBS be competitors when they are publishing actual, factual news and not celebrity bullshit and Murdoch propaganda? I agree though they are not on a level playing field as they only have the backing of tax dollars and a pissweak Australian government in comparison to the 36 billion dollars of Rupert.
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This has to be a joke, doesn’t it? Turnbull and Murdoch in bed together whining because someone dares to challenge them?
News Corp moaning about about not having a level playing field. What? They run most of the print media and over-dominate it. Now they want the same with television?
Screen Producers Aust whining about the ABC and SBS having a disproportionate influence commissioning 46% of all productions. No mention that if they didn’t much of them wouldn’t have happened and/or have been of the same outstanding quality.
What a joke. I would gladly pay an annual subscription to the ABC/SBS consortium where there is real value. Never, ever, will Fox get one cent from me. It’s rubbish.
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There are two ways to deal with competition.
Whinge.
Or get better.
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It sure is not a level playing field.
The commercial broadcasters are not required to broadcast to all of metro, regional, rural and remote Australia.
They also don’t have to provide television, radio and online.
They also are not allowed to take advertising money (thank goodness).
They are required to broadcast news, parliament and religion.
Let’s see how the commercial broadcasters would go with those mandatories to name a few. They simply don’t know how good they have it. And yes to the neo-cons, I know the ABC is publicly funded, but given the grants and tax concessions the broadcasters get so are they to at least some extent (remembering fondly the Goanna in the 1991 House of Representatives Select Committee Enquiry into the Print Media Industry).
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When it comes to reporting the truth and being level with the right and left wing media which is so heavy to the left at the moment i fined it very hard to see a level playing field here and all media out lets should take a real good look at themselves especially the ABC and SBS.
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Exactly what I was thinking. A billionaire media mogul who has had the printed news wrapped up for decades. Turnbull (how much does he hide in the Caymans?) ffs!
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Lets face it, Terrestrial Television in it’s current form probably won’t exist in another 10-15 years. So with News Corp and Free TV Australia lobbying the Australian Government to effectively shutting down the online presence of the ABC and SBS, would basically mean they would no longer exist.
And to that extent I think that’s their end game and especially now that they have a sympathetic Government in power, any review will be politically skewed to the detriment of the ABC,SBS and the Australian people.
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