The ABC and the changing media landscape 1
THE ABC AND THE MEDIA LANDSCAPE The Australian media is and always has been characterised by a mix of publicly-funded broadcasters and commercial media operators. In recent years, the media sector has experienced disruptive change. The growth of the internet, smartphones and tablet use, and the rise of digital giants (such as Google and Facebook) have radically changed audience behaviour. In many respects, the market is now global. This new environment and competition has created challenges for traditional media companies, including the ABC. It has also expanded choice for audiences, and made it more important than ever to provide original Australian content and independent Australian journalism in a crowded market. The ABC s role remains to deliver on its Charter (slide 6). This means providing innovative and comprehensive broadcasting services, and digital media services. 2
THE NEW MEDIA LANDSCAPE (1) What the changes mean for audiences While broadcast TV remains a major medium, Australians are watching less of it 6hrs 20 mins less per month in 2017 compared to 2016. 1 People are spending more time online, and using mobile devices to source news. Australians aged 18 and older now spend on average 21 hours and 36 minutes per month watching online video on a desktop, laptop, smartphone or tablet 1 Among radio listeners, 21% of Australians aged 12+ claim to use a mobile phone, computer or TV to listen to radio while at home. 14% claimed to listen to AM/FM radio online 3 At least 74% of Australians are now sourcing their news on mobile platforms, and online news is the main source for 43% of Australians 4 The video-on-demand (VOD) market grew significantly between 2014-2017: both broadcaster catch-up services and subscription VOD (eg Netflix). 2 o Most VOD viewing is at home, but 1 in 4 Australians are now watching VOD out of home at least once a month. o VOD users still watch content via existing platforms, including broadcast TV. Sources: 1 Australian Video Viewing Report (Q4, 2017); 2 Screen Australia, Online & On Demand 2017: Trends in Australian online viewing habits; 3 The Infinite Dial Australia 2018; 4 Digital News Report 2017. 3
THE NEW MEDIA LANDSCAPE (2) What the changes mean for traditional media companies Change in share of Australian advertising expenditure by medium between 2009 and 2016 (percentage) Many submissions to the ACCC s current inquiry into digital platforms indicate that the entry and activities of new digital platforms have disrupted the traditional commercial media business model. 1 These shifts are indicative of changing dynamics in the media sector more broadly. 2009 46 28 7 15 3 1 The share of online advertising expenditure has increased in the last decade (see figure) 2, a trend that is expected to continue. 3 2016 13 25 8 48 5 1 Digital platforms (such as Google and Facebook) have been estimated to take up to 40% of the total Australian ad revenue in 2016 equating to around three quarters of the total Australian online ad expenditure in that year. 2,3 0 10 20 30 40 50 60 70 80 90 100 Print Television Radio Online Outdoor Cinema Sources: 1 Submissions to ACCC Digital Platforms Inquiry (2017); 2 ACCC Digital Platforms Inquiry, Issues Paper (2017), data sourced from ACMA Communications Reports. 3 Morgan Stanley Research (2016), Australian Media, Internet and Technology. 4
THE NEW MEDIA LANDSCAPE (3) What the changes mean for content costs and competition In an increasingly borderless market, big global players (Amazon, Netflix, Facebook, etc) with large content budgets are able to attract top talent. Rising demand and competition for content, combined with rising expectations from audiences for high production values, is driving up the costs of production. For example, between 2012-13 and 2016-17, the average cost per hour of Children s TV drama (Animation and Live Action) increased by 52%, while the cost of drama miniseries rose by 30%. 1 Source: Screen Australia Drama Report 2016/17 5
THE ABC S CHARTER AND LEGISLATION The ABC s Charter 1 tasks it with the functions, among other things, of: 1. Providing within Australia innovative and comprehensive broadcasting services of a high standard as part of the Australian broadcasting system consisting of national, commercial and community sectors and, without limiting the generality of the foregoing, to provide: a. Broadcasting programs that contribute to a sense of national identity and inform and entertain, and reflect the cultural diversity of, the Australian community; and b. Broadcasting programs of an educational nature; 2. Transmitting to countries outside Australia broadcasting programs of news, current affairs, entertainment and cultural enrichment that will: a. Encourage awareness of Australia and an international understanding of Australian attitudes on world affairs; and b. Enable Australian citizens living or travelling outside Australia to obtain information about Australian affairs and Australian attitudes on world affairs; 3. Providing digital media services; and 4. Encouraging and promoting the musical, dramatic and other performing arts in Australia. The ABC is striving to continually meet these objectives, while adapting to the current disruption in the media sector. The ABC uses various distribution platforms and channels to efficiently reach Australians. Source: 1 Section 6(1) of the Australian Broadcasting Act 1983, hereafter the ABC Act. 6
THE ABC: COMPLEMENTING THE MARKET Delivering distinctive content, choice and quality for audiences The ABC provides high quality and distinctive content. Among Australians (2016-17): 1 o 81% believe the ABC provides quality programming o 83% value the ABC and its services to the community o 78% consider the ABC to be distinctively Australian, and that the ABC reflects the cultural diversity of the Australian community. The ABC plays a vital role in delivering services throughout regional Australia for example, it operates from 48 regional locations around Australia. 2 The ABC reviews what makes it distinctive and invests in those areas, including in content with: o wide appeal (such as Conversations, Gruen, triple j Hottest 100) o specialized appeal (such as Radio National and Classic FM programming, Compass). The ABC provides audiences with choice, is independent, and is not driven by ratings or profit. o In 2016, 80% of the 50 top rating TV programs in the market were reality and sports programs 3 genres which are not a focus for the ABC. o The ABC focuses on various other genres including comedy, documentary, drama and arts. Sources: 1 ABC Corporate Tracker; 2 ABC Annual Report 2016-17; 3 ABC submission to the Australian and Children s Screen Content Review, December 2017. 7
The ABC Charter is broad and expansive in describing the services to be provided to Australians. The ABC has always operated alongside commercial broadcasters. o o The ABC was never intended to be a market failure broadcaster, only delivering services that commercial broadcasters were not willing to provide. Under its Charter, the ABC has a responsibility to provide comprehensive services and to provide a balance between broadcasting programs of wide appeal and specialized broadcasting programs. Previous reviews have endorsed the role of public service broadcasting in Australia. No previous review (for example, from the Dix Review in the 1980s, to the Mansfield Review in the 1990s, to the Productivity Commission inquiry in 2000) has suggested that the ABC should leave genres like entertainment and information to the commercial media alone. The ABC s activities add to the strength of Australia s media ecosystem and benefit audiences, including by: o o THE ABC: CONTRIBUTING TO THE MARKET Innovating and expanding choice to benefit audiences \ driving innovation (for example, new multichannels ABC2, ABC3, ABC News 24 helped drive digital TV take up; the launch of iview demonstrated the viability of catch-up TV, and the ABC was an early provider of podcasts) expanding choice for audiences (for example, in the provision of Australian music, drama and news). International research 1 (across 14 markets, including Australia) indicates that public broadcasters that deliver innovative, high-quality programs create pressure on other content providers to do the same, creating a virtuous circle. The research found a positive correlation between public funding and commercial revenues. Source: 1 Research for the BBC (2013), Public and Private Broadcasters Across the World: The Race to the Top. 8
THE ABC: CREATING SPILLOVER BENEFITS Contributing to broader economic and social benefits The ABC is at the heart of Australia s creative industries. o It is Australia s largest cultural institution and creative employer. The ABC generated $576 million in production activity across the country over the last five years 1 76% of Australians consider that the ABC encourages and promotes performing arts such as music and drama. 2 The ABC delivers educational benefits through high-quality content. o This includes educative factual shows and documentaries (such as Catalyst, War on Waste), and educational children s content (such as ABC Education and Behind the News) 82% of Australians consider that the ABC provides programs of an educational nature. 2 The ABC is an independent and trusted source of news. o 80% of Australians believe the ABC s news and current affairs coverage is fair and balanced; and 82% of Australians trust the information provided by the ABC (above all other Australian media organisations). 2 The ABC plays a pivotal role in regional and rural Australia. o Investing an additional $15 million annually in regional Australia in 2017, creating 80 new content roles around the country. The ABC has the largest dedicated rural reporting workforce in Australia. o Playing a vital role as an emergency broadcaster. Sources: 1 ABC Chairman Justin Milne delivered the 2017 Hector Crawford Memorial Lecture at Screen Forever, Melbourne 15/11/2017; 2 ABC Annual Report 2016-17, ABC Annual Public Meeting 2017. 9
THE ABC S DIGITAL SERVICES Staying relevant, responding to audience demands To deliver on its Charter, the ABC is ensuring its content is available where and when people want to access it. The ABC is empowered to deliver digital media services s. 6 of the ABC Act and to promote its own content s. 25(1) of the ABC Act. These services which are provided in addition to the ABC s broadcasting services are important for reaching the broadest Australian audience in the contemporary media environment, and as Australians change the way they access content. Audiences use and value the ABC s own suite of digital services. o In 2016-17, the average monthly reach of ABC online was 7.7 million or 39% of online Australians. 1 o Among those who used the ABC website, 89% believed that the quality of the content was good, while 85% of users considered that ABC online did a good job in providing relevant content. 2 The ABC is also engaging with digital audiences on third-party platforms (eg Google and Facebook) to ensure ABC content is easily accessible to all Australians. o In March 2018, the ABC reached 18.8% of total Australian audiences through third-party platforms. 3 o The ABC s online marketing spend accounted for 0.2% of its overall budget (2016-17). Sources: 1 ABC Annual Report 2016-17; 2 ABC Corporate Tracker. 3 ABC Submission to the ACCC Digital Platforms Inquiry, 20/04/18. 10
THE ABC: REGULATION AND ACCOUNTABILITY Clear and extensive accountability and reporting functions The ABC is subject to a number of regulatory obligations not faced by its commercial counterparts its obligations under the ABC Act and as a Commonwealth entity. Other media sector regulation also applies to the ABC, including certain provisions of the Broadcasting Services Act 1992 and the Radiocommunications Act 1992. A process for considering competitive neutrality complaints has been in place since 1996. o The Australian Government Competitive Neutrality Complaints Office (AGCNCO) is an independent unit within the Productivity Commission. It reports to the Treasurer. o AGCNCO has investigated one complaint about the ABC s production facilities, and found that the ABC s activities were consistent with competitive neutrality principles with no further action required. 1 Source: 1 Productivity Commission and the Commonwealth Competitive Neutrality Complaints Office (2000), ABC Production Facilities, Investigation No. 4. 11
THE ABC: SELF-REGULATION AND ACCOUNTABILITY The ABC has high editorial standards and processes The ABC is strongly committed to setting the highest editorial standards and ensuring compliance with them. Editorial Policies Editorial Training Editorial Reviews Complaints Handling Comprehensive and thorough Regularly updated Proactive and regular Thorough and independent Publicly available Provided to all ABC content makers Publicly available Transparent 12
THE ABC: REGULATION AND LOCAL CONTENT Delivering high levels of Australian content Although the ABC is subject to content requirements under its Act, it is not subject to specific content quotas. Nevertheless, the ABC delivers very high levels of Australian content (for example, the table below provides comparisons of ABC local TV content with commercial quotas) 1. Some of the commercial broadcasters local content quota requirements are met with New Zealand content. 2 Content standard Commercial broadcaster requirement (Calendar Year) Australian content primary channel 55% 69% First release Australian documentary 20 hours 50 hours Australian children s P content 130 hours 1, 486.5 hours Australian children s C content 260 hours 1, 469.8 hours First release Australian children s drama 25 hours 36.5 hours First release Australian drama 250 points 204.4 points ABC TV (2016-17) The ABC also delivers high levels of Australian music across its radio network for example, 57% of music on triple j, 57% on ABC Country and 100% on triple j unearthed in 2016-17. 1 Sources: 1 ABC Annual Report 2016-17; ABC Submission to the Australian and Children s Screen Content Review (September 2017); 2 ACMA, Australian content compliance results, last updated 25/05/2018. 13
THE ABC S COMMERCIAL ACTIVITIES Longstanding supplement to ABC s activities The ABC undertakes some commercial activities that raise revenue and assist the ABC to meet its Charter obligations. These activities are disclosed in the Annual Report. o Current activities include: international content sales, Australian music, book and magazine publishing, kids events, brand licensing, and TV production partnerships. In 2016-17, ABC Commercial recorded $43 million in revenue this represented less than 5% of the ABC s total revenue. 1 Profits are reinvested into content development o Several public broadcasters in other countries have much higher commercial revenues as proportion of their total funding for example the proportion was 34% in the UK in 2014. 2 There is a long history of ABC Commercial activities. o The ABC s first commercial activity was a Cricketing Magazine in 1933. o ABC Enterprises commenced full-scale operation in the 1970s and worked with ABC content divisions to commercialise content in domestic and international markets. o For many years, ABC Commercial s flagship was the ABC Shops network. Facing a global decline in retail in 2015, ABC Shops refocused online-only and via a franchise network. Sources: 1 ABC Annual Report 2016-17; 2 Nordicty (2016), Analysis of Government Support for Public Broadcasting.. 14