Is the ABC's business model sustainable?

Speculation suggests that following the Expenditure Review and the Productivity Commission findings, the ABC could face a $22.5m pa. efficiency dividend.

I have previously speculated that the government would not deal with the ABC along ideological grounds but based on it's business model. I firmly believe that the ABC will be seen to be just as full of alleged cronyism as many of the trade unions.

A classic example is a recent disclosure on the costs of the three part ABC production on Paul Keating hosted by Kerry O'Brien. This production cost taxpayers $1.2m, much to the disgust of local production companies who asserted such a production could have been done for $50k using local companies and Laptop based production techniques?

Instead the ABC "contracted" O'Brien's own production company and incurred his fees in addition to his production company hire contract.

If this is the norm rather than the exception, then the ABC could be seen to be diverting projects to its "own" and inflating costs. The Efficiency Review and Productivity Commission will of course determine this.

At risk also for the ABC is their ABC overseas network franchise.

Since speculation has gone public, we now have a metric with which to work, namely the efficiency dividend of $22.5m a year and can measure its potential impact on the ABC's business model. If it is as flawed as I suspect the ABC will very vulnerable financially.

Total 2013/14 Revenue $1.2bn

Additional Income for the last 5 years is $225m over ten years for ABC overseas at $22.5m pa. Plus $10m for the "Fact Check" unit. Total additional revenue outside government funding provisions $35.5m pa.

Employee emoluments $477m pa (2013/14 includes redundancy provisions)

So at risk for the ABC is the $22.5m pa for international networking plus the efficiency dividend of $22.5m a year. It is yet to be seen if the remaining funds for the "Fact Check" unit may also be at risk. So conservatively they could face $50m a year in reduced income over the next five years.

Now take a look at their wages bill as a percentage of both current revenue and against future declining revenue. It is already ridiculous and unsustainable at 38% and will now blow out even further.