Selling the ABC and other tricky media issues
The media talking about itself can be very self-indulgent not to mention annoying to outsiders. Yet the politics of media have exploded in the last while and so it has been necessary for the media to take a good hard look at itself.
The government's current inquiry into media regulation isn't about poor behaviour per se, but rather political payback. Similarly the botched tender process for the Australia Network was an absolute disgrace. Here the tender process has been perverted by claims of payback against News Limited, about disputes between Julia Gillard and Kevin Rudd, cabinet leaks, and what not. Sky News should be compensated for their time and effort. But the real question to be asked is who should own and/or run the Australia Network?
The feral state of media politics is masking some important economic issues and considerations that relate to the media. The issues, as I see them, relate to the role of government in regulating and owning media outlets.
Economists have well-developed theories of regulation. The standard argument, following the English economist Arthur Cecil Pigou, is that government regulates in the public interest. The view being that governments can intervene in the economy to improve market outcomes.
This sort of argument, for example, justifies the existence of the ABC.
This isn't a particularly good argument, but is the best argument that can be mounted for public media ownership.
Then we have the private interest argument developed by the American economist George Stigler. This theory suggests that regulated industries capture the regulator and create barriers to entry and fix prices.
Regulation works for the benefit of the regulated and not the general public.
Unfortunately these two theories are somewhat static and can't explain a number of real-world features. To overcome that problem Harvard University's Andrei Shleifer (and various co-authors) has developed an institutional theory of regulation that examines the trade-off between the costs of "disorder" that arise when there is no regulation and the costs of "dictatorship" that arises when there is too much regulation.
This trade-off a nowhere better illustrated than in media regulation.
There are no elegant solutions to media regulation, only messy trade-offs and value judgements. We are all appalled when a dead girl's mobile phone records are hacked, but bemoan the decline in investigative journalism. Different segments of the population welcome Wikileaks revelations or ClimateGate emails but deplore the other.
It seems that the profit motive imposes high costs of disorder. But what people overlook is that disorder is tempered by defamation laws, and existing laws that protect privacy. Those who would argue that the media requires more regulation need to explain why the existing legal framework is failing. It's all very well to point to the more egregious media behaviour observed in the UK, yet few can point to that kind of poor behaviour in Australia. So arguments for more media regulation in Australia must be pretty poor.
But what of government ownership? As it turns out the Australian government owns a significant portion of the Australian media industry.
Australia is hardly alone in having significant government media ownership. In a study of 97 countries, Andrei Shleifer and his co-authors found that government ownership in broadcast media is quite common.
There are good arguments for government ownership in some industries.
Prison services, for example, are a classic case where public ownership is a better option than private ownership. The question is whether media is such an industry.
Shleifer and his co-authors investigated whether a public interest argument could be sustained in justifying extensive government ownership in the media. Alternatively a public choice argument whereby government regulates and owns media in order serve its own interests. After extensive analysis they find that government ownership of media is not in the public interest, but rather suits the private interests of political elites. In other words, we should be suspicious of significant government ownership in the media as it generally undermines political and economic freedoms.
It would seem that Australia is something of an outlier in that analysis - our political and economic freedoms are high by world standards. Our level of government ownership is low by world standards and government market share is low by world standards too. On that basis it is unlikely that the government abuses its media ownership - ABC audiences are too small. Government media, in Australia, faces competition from private providers. There is no basis, however, for complacency. Private competitors to government owned media can be regulated by the government.
It isn't clear why Australia needs to have a soft propaganda message broadcast to the region. But I'm happy to concede that reasonable people might disagree on that point. Why would the government put that program out to tender when it already has an agency to do the work? To my mind the ABC should be performing that function. That isn't to say that the government shouldn't put the whole of the ABC out to tender - but that is a far more controversial proposition.
To sum up; there is no good reason to increase media regulation in Australia. There is no good reason for government to own media in Australia. To the extent government does own the media, that media should be used to provide soft propaganda services to the region. There is no good reason why the whole of the ABC couldn't be put out to tender rather than bits and pieces.
This article originally appeared in the The Drum on 08/12/11 and can be accessed at http://www.abc.net.au/unleashed/3720568.html.