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ABC and SBS Efficiency Study – Terms of Reference

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The Study

The national broadcasters, ABC and SBS, receive approximately $1.4 billion in funding a year from the Australian Government. It is a routine responsibility of all Government authorities to use taxpayers' funds as efficiently as possible and to strive for operational improvements, and the broadcasters are no exception.

Parliament has agreed over time to a broad range of responsibilities for the ABC and SBS which are incorporated into their respective Charters. The delivery against those Charter responsibilities, relative priorities and resource allocation are largely at the discretion of the ABC and SBS Board and management. There is limited transparency to the Australian public, the Government and the Parliament of the breakdown of costs of delivering the ABC and SBS Charter responsibilities and whether these could be more efficiently delivered by the national broadcasters.

This study will seek to clarify these costs, provide options for more efficient delivery of services (based on current practice in Australian broadcasting), identify risks and any impediments to change and assist the national broadcasters to continue to deliver their Charter responsibilities in ways that minimise costs and maximise benefits for the Australian community.

The study will focus on the costs of inputs—that is the 'back of house' day-to-day operational and financial operations, structures and processes applied to delivering ABC and SBS programs, products and services. It is not a study of the quality of the national broadcasters' programs, products and services, or the responsibilities set out in their Charters but of the efficiency of the delivery of those services to the Australian public.

Scope

The Department of Communications will conduct the study and will be assisted by Mr Peter Lewis, formerly Chief Financial Officer of Seven West Media Limited. ABC and SBS personnel will also form part of the study's secretariat. It will focus on all ABC and SBS activities, other than those specifically specified as out of scope below, including:

  • Television
  • Radio (Analog and Digital)
  • International services
  • Digital services including online and catch-up TV
  • Production—including facilities
  • Advertising (SBS only)
  • Enterprises/retail services
  • Corporate overheads
  • Asset management and capital expenses.

The study will not be limited to looking at these activities separately, and could also look at outputs on a cross-platform basis i.e. delivery of news and current affairs across TV, radio and digital, where useful.

Out of Scope

  • Transmission costs, which will be the subject of separate advice to Government;
  • Changes to the ABC and SBS Charters;
  • Editorial policies of the national broadcasters;
  • Allowing advertising on the ABC;
  • Quality of programs/products delivered by the broadcasters.

Terms of reference

The study will provide an objective assessment of the efficiency of the ABC and SBS in delivering their services. The study will:

  • identify the real current and expected future costs of each output of the ABC and the SBS (as set out in Scope above);
  • test those costs against better practice broadcasting operational models and practices and quantify differences;
  • identify the options available to the broadcasters to improve efficiencies and the benefits and risks of such options;
  • identify any impediments to implementation of such options—this analysis may go to operational, governance, structural, financial and cultural issues within each organisation;
  • develop an 'ideal cost-base' for the national broadcasters and compare this with current cost base.

The study will also identify options to improve:

  • transparency of the costs of national broadcasting services to maintain confidence in their expenditure of public funds;
  • the processes and systems for decision-making across different genres, platforms and priorities; and
  • operational governance and management practices/processes of the national broadcasters including ways of enhancing the efficient and transparent management of the organisations.

Without further limiting its scope, the study should:

  • Consider the return on investment of the public funding for the national broadcasters, including in terms of audience or other usage;
  • Analyse costs at the level of services (eg ABC1, ABC2, Radio National etc); platform (television, radio, online); audience brands (eg ABC 4 Kids, or News); program genre; and in relation to specific Tied Funding such as the National Interest Initiative;
  • Provide breakdowns of these costs in States and regions, and by audience or user demographic; and
  • Quantify, as far as possible, the costs of operating at locations across Australia.

In undertaking the task, the study will have regard to:

  • The ABC and SBS Charters, legislated obligations and editorial and operational independence from government;
  • Ratings, audience reach and other relevant audience measures for the ABC and SBS programming;
  • Changing audience demand, particularly increasing use of catch-up and online services;
  • The role of ABC and SBS in provision of emergency services information;
  • The geographic spread of services and infrastructure, their importance to communities compared to the costs of maintenance; and
  • The relative importance/performance of the ABC and SBS compared to other broadcasting services in local markets.

The report arising from the study will be provided to the Minister and the Chairs of the ABC and SBS on completion.

Timeframe

The project will commence in February 2014 and deliver its final report in April 2014.

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