ABC managing director Mark Scott's address to the National Press Club

Below is the text of today’s address to the National Press Club by ABC managing director Mark Scott.

One Sure Bet: The Future of Public Broadcasting

At the ABC, we are in the midst of something that’s very rare in media circles and rarer still in Canberra – a well-planned, warm-spirited CEO transition.

This happens about as frequently as the arrival of Halley’s Comet. Like prime ministers, media executives usually leave the same way they arrive – fired with enthusiasm.

I have loved being managing director of the ABC, but felt strongly that two terms marked the right time to leave, both for me and the ABC. And I’m very pleased to have time to work alongside Michelle Guthrie when she returns to Australia in April, before she takes the reins of the corporation in May.

I’m sure she’s going to do well and like me, will feel honoured to have the opportunity of leading one of Australia’s most loved public institutions.

Until then, it’s hardly a coast to the line. There’s a lot going on, with a lot at stake. Crucially for the ABC, this is a triennial funding year and in the May budget we are seeking funding that will underpin all the ABC’s activities until the end of June 2019.

That night in May is one of consequence for the ABC. The next three years of funding will shape the organisation’s future role in Australia’s turbulent media landscape.

The pattern

A lot can happen in three years, but the pattern in media is already set. The potential is there for us to see. In the next three years, it would not be unreasonable to anticipate:

• the demise of weekday print editions of some of the nation’s most important newspapers;

• the closure of many regional newspapers and the continued loss of local content makers in the bush, with fewer regional radio and TV news services;

• further dramatic newsroom cuts; and

• the increased siphoning of advertising revenues from traditional media players to the newer giants like Google, Facebook and Apple.

We might expect to see:

• pressure from commercial TV networks to lessen their Australian content requirements; and

• a continued erosion of the percentage of Australian content on our screens as massive global libraries are unlocked through YouTube, Netflix and other SVOD providers.

All these scenarios are possible. Many are likely. Some are simply inevitable. It isn’t idle speculation. It is simply a continuation of well-established trends that are being accelerated by other factors, such as the growth of fast broadband and the ubiquity of mobile devices.

Closed local media markets have become open, global ones. The old link – between locally created content and local advertising markets – has been broken. The push to get audiences to pay for content is constrained by the countless content choices they have - and by the quality of the cheap or free global offering.

It’s hard to see a traditional news or broadcast media company, anywhere in the world, that is thriving through their traditional business model. Deep-pocketed global giants and nimble upstarts are ambitious and on the move.

And under changing ownership models – rich, old-school proprietors who were willing to trade profit for political influence, have for the most part, been replaced by media companies with open-share registers focused exclusively on profit and growth.

We might regret the slashing of newsrooms and commercial TV filled with endless imported reality formats, but this is simply commercial media being commercial, acting in the interest of their shareholders.

But where does it lead us? And what are the implications for Australian culture, conversations and stories?

The paradox of the age of plenty is that we now have so much more – more to watch, more to listen to, more to read – and a post-Sopranos world so rich in quality television that not even binge watchers can keep up with it.

Yet amidst all this richness, the share of quality Australian content is shrinking, overwhelmed by the flood of global content on multichannels, pay TV and the new SVOD services. It is one of the mixed blessings of being a country of 24 million speaking a language that 750 million others speak.

In entertainment, information and news – the impact is evident. Fewer journalists in smaller newsrooms. Regional shutdowns with the loss of local voices. More cooking shows, home renovations and celebrities in jungles. Reduced investment in quality television production that informs and enriches Australian culture and identity.

Shane Warne drinking a rat-offal smoothie on prime-time TV is possibly just a sign of the times: an example of one answer to the question of how commercial media might best build shareholder returns.

It’s inevitable short-term thinking, driven by a market pressure to produce the highest return for the lowest cost in the fastest time. But if we’re concerned about the long-term effect of this pattern on our culture, the single most important thing the Government can do is to appropriately invest in the one segment of the media market that’s specifically not set up to produce profit: the ABC.

A well-funded ABC is one sure bet in an uncertain, unstable media world. It is the way of ensuring that the Australian conversations, culture and stories that shape our sense of Australian identity, are present in the mix. Available free-of-charge in every Australian home.

A way to guarantee a steady stream of quality and innovative programs and services that produce a social profit of enriching and informing citizens, rather than simply seeing audiences only as consumers.

Isn’t that one of the strongest reasons for having a public media service? This is what the public expects of the ABC. It’s why they support it – and want it properly supported.

Looking back

As I get set to leave the ABC, I see some significant achievements – challenges met and overcome. Yet I also see significant enduring challenges waiting to be dealt with.

Of course I am pleased by the ABC’s successful transformation, how it’s become a public broadcaster for the digital era - all the possibilities that have been realised thanks to an outstanding and highly committed staff.

I’m heartened that the ABC still generates such widespread and passionate support from its owners, the Australian people, with Newspoll measured approval ratings remaining in the mid 80s. The same poll shows the public overwhelmingly believes the ABC is fair and balanced. The ABC continues to be the nation’s most trusted and respected media organisation.

But inevitably, there are testing times ahead. Some challenges are common to every media organisation in a disruptive, dramatically changing environment. The ABC has shown it can and must adapt and evolve to meet those particular challenges.

But the greatest challenge to the future of the ABC, ironically, comes from those who fund it on behalf of its owners. Today’s Government. Future Governments.

Will the ABC be granted the resources to grow and evolve to meet changing audience demands and expectations? Or will it have to contend with a budget that offers it no alternative but to cut, shrink and retreat?

Let’s look at these issues.

If we compare today’s ABC with the ABC of several decades ago, a few things really stand out.

The ABC once had a much bigger budget. Around A$200 million more in real terms. And far more people. About 2000 additional staff. It was a well-padded, bureaucratic public broadcaster – a picture of the ABC long out-of-date, but which some critics still conveniently carry with them.

Not only was it a bigger organisation, its share of GDP and slice of the overall government budget was much bigger. It was 0.14% of GDP 30 years ago – today it’s 0.05%. The ABC’s share of government expenditure is effectively at its lowest level in decades now and the per capita spend on public broadcasting is significantly lower than many other nations, and dramatically lower than the BBC.

Yet back when the ABC had far more resources, it produced just a fraction of the content it does today. The ABC was effectively one television channel and two radio networks.

Today’s ABC consists of four television networks, five radio networks and more on digital. A host of online services and sites including ABC iview.

We have created places to showcase ABC programs and Australian content makers - as well as places to showcase talent outside the ABC, from audiences, as with triple j unearthed and ABC Open.

We’ve come a long from the image of Aunty that prompted senator Jim McClelland, as chairman of the Senate standing committee on broadcasting just over 40 years ago, to call the ABC “a dithering, timid, old fuddy duddy”.

Some of the innovation and new services have been expressly funded by government, in response to submissions by the ABC. That’s how we delivered the children’s channel, ABC3; how we significantly expanded our drama slate; how that great regional Australia project, ABC Open, came into being.

But many of these other new services such as ABC News 24, iview and nearly all our digital activity over the past decade have been funded from within the ABC’s existing budget, without one additional cent from taxpayers. The shift to digital is both necessary and it’s expensive.

To respond to public expectations so that it could fund and deliver these services, the ABC continually reviewed its priorities, embraced new technology and the changing work practices that came with them.

This double-barrelled approach – additional funding from government where necessary, along with the ABC’s own efficiency-based reinvestments – delivered a sweeping transformation of the ABC and set it up for the digital era.

It has kept our weekly reach into the homes of Australians high; our approval ratings exceptionally high. And when it comes to quality, people believe the gap between what the ABC offers and what is offered elsewhere remains large – and according to Newspoll – is increasing.

The ABC’s innovation, its investment in quality and distinctive services, its mission to serve Australians everywhere has led many, including the prime minister, to conclude that the ABC is now more important than ever.

Given the ABC’s popularity, distinctiveness and importance, I’m surprised how aggressive some political opponents of the ABC continue to be.

I am not particularly worried about newspaper polemicists, shock jocks or even advocates from think-tanks who, while calling for the ABC’s abolition as an irrelevance, rush to be on the ABC or even campaign for their own ABC programs.

That’s their business.

The response of some politicians to the ABC on the other hand is important, because when it comes to the ABC, they have real power. And you would have thought politicians would be more focused on what the public thinks of a public institution, so intrinsic to the public good.

The ABC is popular, but it’s not perfect. Flawed at times, with mistakes triggered by the tyranny of live microphones or rushed judgments. Occasional blind spots, misreads of public taste, stories overlooked, or perspectives not considered. At times we make mistakes that give our critics a very easy ride.

We do recognise the trust that the public places in us and we are constantly looking to improve our performance.

In 2013, the ABC chairman announced here at the Press Club that the ABC would be commissioning external editorial audits of the ABC’s coverage of contentious topics.

They follow an earlier series established soon after I joined the ABC. Last week I announced the creation of a new role of Editorial Director to ensure consistent and mandatory referrals for editorial advice on significant and controversial matters and to oversee standards, training and guidance.

I believe our editorial and creative performance to be very strong. The evidence suggests that this is a view shared by the Australian community. The public judge and value the ABC by what it gets right. Some politicians and partisans tend to judge it only by what sometimes goes wrong.

That’s why 84% of Australians believe the ABC is valuable or highly valuable. That’s why the ABC is consistently rated as the nation’s most trusted media service.

The public wants the diversity of content the ABC delivers. They want programming that stands out clearly as being driven by something other than profit-seeking. They want a commitment to diversity and plurality. They admire the independent, courageous journalism, the celebration of culture and brilliant story-telling. They understand it won’t all be perfect. They forgive the lapses, knowing that we will be committed to doing the best we can.

While some pollies vehemently oppose the ABC, there are far more who will tell you they love the ABC – while still occasionally taking issue with some programming.

But the public who fund the ABC want to see action, not words. To see that support expressed in practical, powerful ways. To see the ABC’s independence safeguarded and to ensure the ABC is adequately funded to fulfil its charter and secure its future.

Promises, promises

The ABC entered the last election campaign with commitments from all major parties to maintain funding of the ABC.

Of course, the reason the promise was made – deliberately – and repeated often before and after the election by Tony Abbott – was because politicians know how popular the ABC is. The public appreciates its value. They don’t want its funding cut.

Yet the subsequent decisions made by the Abbott government will strip $350 million from ABC spending over a five year period, with the removal of funding for international broadcasting and the $250 million cut from the ABC’s core budget.

The largest cut came after a departmental efficiency review that was fully supported by the ABC. We have been in the business of finding efficiencies for many years. We want to be as efficient and effective as we can be with our owner’s money, whilst delivering the content and services they demand.

News 24, iview, triple j unearthed and Double J, the websites and apps, podcasts and streaming services – every one of them was funded by ABC efficiency savings being reinvested in services that have come to mean so much to Australian audiences.

This is not just a great economic story and a great cultural story – it’s a great business story of agility, innovation and renewal.

The ABC worked with the government review to find further efficiencies. But rather than keep its election promise – and allow the ABC to reinvest those funds for digital content and services – the government axed the funding from the ABC’s budget.

Instead, to make vital digital investment, the ABC was forced to cut broadcasting content – and our remaining investment priorities far outstrip our capacity to fund them at this point.

These cuts were decisions made under the Abbott government.

We will see what the Turnbull government’s commitment to the ABC and to clear election promises is, through the tri-funding budget outcome in May.

Nearly three years ago, the Gillard government allocated an additional $20 million per annum to the ABC to support enhanced news services, acknowledging the industry’s loss of specialist reporting staff, the importance of local digital content and declining news investment in regions.

The ABC invested the money wisely to the benefit of the Australian people. We delivered state-based editions of the ABC News website with more local stories. It was a shot in the arm for regional Australia, with extra reporters in the country and outer metropolitan areas. A national reporting team in key areas like national security and defence, social services, technology, resources, rural and regional. This team undertakes investigative reporting across platforms and provides more in-depth reporting and context on critical issues.

It also funded major, award-winning in-depth prime time documentary series like The Killing Season and George Megalogenis’s TV series, Making Australia Great – compelling award-winning work, unlike anything else on Australian television.

And all of this and more has added to Australia’s media diversity, created jobs and training and gave us journalism to better inform our decisions and make democratic life more meaningful.

The money has delivered and under the tri-funding agreement, the ABC now needs to bid to keep that money and the services it delivers.

That news funding represents 10% of the ABC’s news budget and to cut it now will mean significant cuts to jobs and programming.

If it was not renewed, it would represent the third substantial cut to the ABC’s budget since the Coalition government was elected on a platform not to cut the budget.

Let me refresh your memories here. Just as there was bipartisan support in parliament for the ABC’s digital activity to be incorporated in its Charter, the additional $20 million per annum for the ABC also attracted bipartisan support. The then-shadow minister for communications, Malcolm Turnbull, welcomed it. He also said, and I believe him, that he was unaware of any planned cuts to ABC funding.

That’s the immediate challenge, but beyond this next triennium, the broader question of funding for the ABC in the years ahead remains.

The ABC has commercial activities now and will continue to have some. But they make a very minor net contribution overall. I can’t envisage a plan to put advertising on ABC platforms. I’m pretty sure any attempt to do so would trigger public outrage, which would only be trumped by outrage from Australia’s advertising-dependent media players.

And the evidence on the subject from around the world is overwhelming. When public broadcasters start advertising – governments gradually withdraw their funding and advertising increases to offset this. Then, programming that once distinguished the public media from commercial media diminishes – as does the public broadcaster’s relevance and importance as well.

The only way the ABC will be strong and relevant in the future is with the government’s adequate financial support.

Australia has a long history of meeting its citizens’ needs through public and private providers working side by side. Public and private hospitals, public and private schools, and within the media, public and commercial working side by side. The ABC is a marvellous public good: funded for the benefit of all, available to be used by Australians everywhere.

The ABC’s commitment to the traditional broadcast platforms will continue. In the medium term, the ABC’s largest audiences will be those watching or listening live to radio and television.

But there is the new expectation: that the public broadcaster will be where the public is, on their digital devices and platforms. Just as it was expected when television began in Australia – people want the public broadcaster to be part of the mix. Now it is streaming television and radio services. New programs created specifically for new digital platforms. A personalised, seamless digital ABC experience. All elements of the ABC of interest to you, brought together for you wherever you are, on your chosen device: one ABC.

The funding demands for the ABC to meet these needs – to create the content, to deliver it digitally – are not insignificant.

And as well as digital services, the content demands for the ABC to fill the gap left by commercial networks abandoning areas of traditional activity will grow.

As commercial TV networks push for deregulation and fewer licensing requirements in the face of steep competition, it’s reasonable to expect they shift investment from quality drama, just as they have from serious documentaries and nearly all narrative comedy and satire.

In pursuit of profitability, we will see a continued squeeze on investment in commercial newsrooms. We can see the impact of market forces on news outlets in the bush.

People expect the public broadcaster to step in, to pick up the slack.

All this is a legitimate public expectation under the ABC charter: delivering radio and television services, with as much original, distinctive Australian content as possible. Quality national and local news services. And new digital content too: streams and archives, websites and apps.

These enhanced or new activities deliver no new revenue to the ABC, but we must deliver them if we want to remain compelling and relevant to future generations.

Overwhelmingly the discourse around the ABC, particularly in political circles, tends to be on the immediate. Of course, political concerns are invariably short-term. It is hard to look beyond the news cycle. Discussions invariably are about last week’s programs, last night’s interview – and – where’s my Q&A invitation?

The immediate pressures squeeze the more enduring issues off the agenda. What the ABC might be or should be, ten years from now; how to ensure this unique, treasured public asset can be protected through the turbulent era of media transformation; how we can ensure it remains a centrepiece of the Australian experience – these are vital issues and cannot be overlooked.

A public broadcasting solution

I fully appreciate the pressures on the public purse. Scarce government funds. Increasing public demands.

And I know the ABC will continue to pursue internal efficiencies aggressively, to scrape together every possible dollar for content.

Yet, in looking to the future for funding public broadcasting, some solutions may already be before us. They’re controversial or courageous solutions, though hopefully not with quite the same Yes, Minister connotations, where “controversial” meant it would lose you votes and ‘courageous’ meant it would lose you the election.

As I said when asked recently in Senate estimates, it is only right to think carefully about how we best serve audiences and whether the current structure for public broadcasting is the right one.

Clearly, both the ABC and SBS have loyal audiences. And those audiences were serviced in quite distinctive ways when each only had one TV channel.

But the model was created nearly 40 years ago. Many lifetimes in media terms, particularly in television.

SBS on television is very different to what it once was – and so is the ABC. Increasingly, the ABC and SBS have tripped over each other, as each strives to meet audience and programming needs best, to maximise audience engagement. At times we’ve even bid against each other for programs and content – and there have been scheduling frustrations as well.

This has increasingly been the case as SBS has moved away from multi-lingual programming on its main channel in recent years as it pursues advertising revenue. ABC2 and SBS2 are not highly distinctive offerings in prime-time, particularly since SBS2 strategically moved to a schedule dominated by English and American acquisitions. Although there was no bidding contest, SBS was upset the ABC showed the Asian Cup football – our top-rating TV program of 2015.

In isolation, these may be rational decisions – and commercial decisions – but together are the ABC and SBS delivering the best return on public investment? And how do you protect and preserve the special role each broadcaster plays?

As set out in the report released this week by The Australia Institute, in this digital era, if you wanted to create a new broadcasting service to serve multicultural audiences, you wouldn’t create an entire separate broadcasting organisation.

Instead, you’d create a channel or channels. You could call it SBS and brand it distinctively. But you wouldn’t create an entirely separate and discreet organisation to do so – any more than Foxtel creates entire new media companies every time it creates new channels.

Separate channels could serve a distinct audience, just as News24 serves a distinct audience, just as ABC3 serves a distinct audience – but with an efficient, streamlined back office.

And if you were starting today, you would think carefully through whether the SBS advertising model is now sustainable given all the other opportunities available to advertisers and whether it makes the multi-lingual charter harder to deliver.

And you would think carefully about how you can maximise the effectiveness and impact of the digital products you could create and distribute.

I wouldn’t imagine the radio services offered by the ABC and SBS would need to change, each serving discreet audiences well.

The ABC and SBS have worked together more closely in recent years – on transmission deals and other areas of joint procurement of services. We invited SBS to join the ABC in our new facilities in Melbourne. But there are limits to what can be achieved as totally separate and independent entities.

By coming together, SBS and the ABC could still offer distinct brands under distinct charters. But it could be done without an entire separate back office, stand-alone buildings, studios and technology, IT, legal, finance, HR and corporate divisions – or a separate board. We could spend more of the funding serving audiences.

But most importantly, while preserving SBS’s distinctiveness and identity in this way, bringing the public broadcasters together would save an estimated $40 million of the $1.3 billion annual spend on public broadcasting. That was what the Boston Consulting Group found when they investigated the issue several years ago. And it is all about doing all we can to free up money to invest in content for audiences.

I don’t raise this, as some critics have suggested, because the ABC has failed to meet its own efficiency measures. This is simply incorrect. The ABC has committed to delivering the $250 million demanded by government and we are on track to do so.

I raise it because it is a real public policy option that could preserve services and distinctiveness whilst delivering real savings for investment in the broadcasters.

Down the track, such a move could lead to even more substantial savings in television services.

Currently the ABC and SBS can together run about eight TV services. Pending compression technology around transmission and restacking, the spectrum could allow even more channels to be delivered.

But how many is the right amount? What services will be better delivered by broadband in years to come? What is core to a public broadcasting offering? Better use of the broadcast spectrum could again free up much more money for digital investment, without demanding more from the taxpayer.

Bringing together the ABC and SBS was last seriously examined by Government three decades ago.

It’s a difficult conversation to even start, with anxieties about SBS being swallowed up and concerns at the ABC about SBS TV’s commercial activity. There will be debate as to the size of the potential savings. I know some love to reject the idea out-of-hand before we even begin to contemplate the reform.

We need a grown-up conversation.

And it is possible to start a sensible conversation on this. Some years ago, towards the end of his term as SBS managing director, Shaun Brown and I had a number of conversations about how a peaceful merger might work. One that would safeguard a distinct identity and remit for SBS and allow the public broadcasters to be more distinctive, in clearly delineated spaces – with no overlap.

No bidding against each other, schedules developed side-by-side to maximise specialist audiences, using studios more efficiently. And shared back office support that would deliver economies of scale. We felt we could have come up with a public broadcasting proposition for government that worked in the interests of audiences, the taxpayers and the broadcasters. A shared solution. Not a takeover, but a friendly merger in the interests of the owners.

But it wasn’t to be. The idea was rejected at the SBS board level and Shaun wasn’t given license to pursue the conversation further. It ended there.

But down the track?

The time will come for a real investigation of this possibility. We should see if there is a better way to use scare resources to preserve identity, celebrate diversity and present a richer, deeper and broader public broadcasting experience to the Australian people.

These future matters will be for others to deal with and I hope they take up the challenge.

The leaving of Ultimo

When Michelle Guthrie takes over the ABC in May, she will find it in pretty good shape, a place that’s focused on opportunities, not obstacles. She will find a great team of people to help her at the ABC – just as I did when I walked through the door, never having worked a day in broadcasting in my life. And she will discover there is no better job, anywhere.

In my early weeks at the ABC, I did an extended radio interview with Julia Baird. She asked about what I wanted to have achieved by the end of my term.

I didn’t have an answer about the end of my term ready – I’d only just started!

But then I did suggest that when I left, I hoped the ABC would a strong and dominant digital media player, in addition to its traditional strengths on television and radio.

And I said that I wanted to ensure that the stories we were telling talked about the things that were important to people, and really helped bring the country together.

I said I wanted the trust and reliance on the ABC to be stronger than ever before. I said I wanted the ABC to be loved by Australians – respected and relevant.

In the decade since, we got some of that done. And in a way, it is still a fitting aspiration for the years ahead. Loved, respected, relevant.

When I started in this job a decade ago, I no idea what was ahead. None of us had seen or considered an iPhone or an iPad. YouTube had just had its first birthday. Few had heard of Facebook, Twitter hadn’t been invented. Netflix sent Americans their DVD movies in the mail. And most Australians, if they had the internet, experienced it unforgettably, even traumatically – via dial-up.

The only constant that remains is that media law reform is imminent.

But I am pleased that, with the dedication and commitment of the people who work there, the ABC has come through these early days of the media revolution as a vital and vibrant organisation.

It’s the independent home of Australian conversations, culture and stories that are essential not just to our identity, but our way of life.

It’s still part of the lives of millions of Australians who use it each day and who want it well supported.

It is part of what makes Australia, Australia.

All of us, including managing directors of the ABC, come and go. I go with a belief in the ABC that is undiminished.

The public’s affection, trust, respect and support for the ABC remains strong. May it outlast us all – and may the ABC’s best days lie ahead.