ABC’s commercial deals pose unfair competition to rivals

Is the ABC deliberately undermining the commercial pros­pects of its private sector media rivals?

Managing Director of the ABC Michelle Guthrie.

Is the ABC, Australia’s media behemoth, deliberately undermining the commercial prospects of its private sector rivals?

Managing director Michelle Guthrie, in a speech to Friends of the ABC in early October, said the commercial media’s problems were the same worldwide and had little to do with the ABC. She is right in so far as it goes, but that does not mean the ABC is not making decisions that hurt private media companies, and doing so with taxpayers’ money using a valuable brand established at taxpayers’ expense.

Last week in Media, The Australian reported that the local operation of The New York Times was looking to collaborate with the ABC, raising two questions.

1. At a time the corporation is under fire from One Nation, why poke the bear by getting into bed with the left wing Gray Lady? Isn’t this likely to be as big a source of criticism as its deal with Al Jazeera, with its ambivalence toward Islamic terror?

2. Ahead of next year’s federal review of media competition and in the face of attacks from News Corp, Fairfax and all the commercial TV networks, why countenance a deal with another company trying to cherry-pick revenue from this market?

An ABC spokesperson, asked about the NYT story and an earlier exclusive in this paper outlining a commercial deal with Netflix, one of the main disruptive threats to free-to-air and pay-TV, ignored the Netflix question and said: “Editorial collaborations with newspapers or digital media outlets (local or international) is a ... very valid thing to do.”

The spokesperson cited previous collaborations with The Australian, Fairfax, BuzzFeed, the NYT, The Guardian and the International Consortium of Investigative Journalists, responsible for last week’s Four Corners tax probe into the leaked Appleby tax files from Bermuda.

That’s also fine as far as it goes editorially, but it is not fine commercially if you are running a local media organisation enduring endless rounds of redundancy as Google and Facebook eat your advertising lunch and then see local taxpayers supporting news deals with overseas companies trying to steal your readers. Ditto Netflix. Why are television executives worried about the deal for Netflix to invest 15 per cent of the cost of the next series of sci-fi drama Glitch in return for worldwide distribution rights outside Australia? Well, that would be because it is a leg-up to a company that employs no Australians, makes no content here but threatens to destroy TV stations that do both.

Now another series is being earmarked for an ABC-Netflix co-commission, a six-hour drama series called Pine Gap.

This is not a cry for cultural protectionism. No, what the ABC is doing, probably with a tin ear rather than maliciously, is analogous to a federal government department using taxpayer funds to help South American iron ore giant Vale export ore around the world in competition with the biggest iron ore operators in this country, BHP and Rio, which employ hundreds of thousands of Australians and pay billions of dollars in tax.

And it is not just the NYT and Netflix. This paper has been reporting on the ABC’s spending on Google ad words: search engine marketing. SEM is used in the commercial world by online news sites to build traffic and advertising. Why is the ABC, with no need to generate ad revenue, paying taxpayers’ dollars to Google to hurt commercial news operators?

But wait, there’s more. Our ABC actually underbid the news organisation owned by the country’s main publishers, AAP, that since 1935 has provided coverage across the nation — often to small newspapers totally reliant on its service — for a commercial contract to supply advertisers with news feeds. AAP employs 175 Australian journalists and does a lot of regional reporting the ABC is required to do under its charter responsibility to “reflect the cultural diversity of the Australian community”.

Speaking after the ABC had undercut AAP’s contract to supply syndicated news feeds to outdoor advertising company oOh! Media, AAP chief Bruce Davidson told Media that the ABC’s “aggressive commercial tactics were jeopardising jobs in markets’’ underserved by the corporation. These would be the same regional markets where support for One Nation is booming, another clear case of political foot-in-mouth by the ABC board.

Or how about the ABC’s commercial arrangement with vitamin and supplements brand Swisse Wellness? Swisse is to receive branding and advertising opportunities on the ABC’s Australia Plus international media service.

This is the same Swisse ridiculed by the ABC’s Checkout program and questioned by academics over unproven medical claims about its products. The ABC was even sued by Swisse.

Commercial television operators lobbying for media reforms mid-year were also critical of SBS and its SBS On Demand service, a virtual free Netflix paid for with taxpayer dollars. While some media writers have supported SBS — they like watching The Handmaid’s Tale — it is hard to see why commercial operators are facing bidding competition at US production houses from a broadcaster whose primary purpose is to reflect the multicultural values of Australia.

Indeed, a good look at the charters of both public broadcasters raises some compelling points. The ABC Charter states that “the corporation shall take account of: (i) the broadcasting services provided by the commercial and community sectors of the Australian broadcasting system.” This would seem to imply the board has a legal duty to do nothing to harm commercial broadcasting.

SBS’s Charter is worth a read. It’s concerned with multilingual and multicultural radio, television and digital services. There is much about supporting languages in use in Australia and cultural diversity but little that would support a decision to build a streaming service of overseas film and television acquisitions. With the government’s Competitive Neutrality Review coming next year, the ABC and SBS could show some smarts by taking a look at last year’s white paper on the future of the BBC.

The BBC paper proposed a couple of strategies by which the BBC could invest in journalism that would support local private sector news efforts. It looked at creating a big data resource that could be available to commercial media and a local public interest journalism resource of about 100 reporters whose work could be available to all publishers. This is similar to the sort of thinking Crikey publisher Eric Beecher has long advocated. It would send the right signals to the government and media rivals if picked up at the ABC. Unlikely, I hear you say.

Indeed, a spokesperson said the corporation had “no such plans”. It is believed some insiders think such ideas would be too costly, could reduce media plurality and may intrude on the role of AAP. But they also might just be an astute way to hush the barking hounds.