The need for diversity.
Advertisers have enormous power over the Australian media. They are the main source of income for commercial broadcasting and newspapers. They provide the cash, and influence comment. On occasions they may even dictate that comment.

It might well be the case, as Professor Henry Mayer argued, that the identity of the media proprietor (be it Murdoch, Packer or some other multi-millionaire) has less impact on output than where the funding comes from. In any event, real media diversity requires not only a multiplicity of proprietors, but also a multiplicity of funding models.

Creeping commercialism - a threat to Australia's three sector system.
Australia had a highly regarded and almost unique broadcasting system. There were commercial broadcasters, funded by advertising. There were community broadcasters, funded by communities and volunteer labour. There was a national sector (ABC and SBS) funded by taxation.

Few countries had such diversity. But that is now breaking down. Community broadcasters can now run advertisements. The SBS is partly funded by advertising. Advertising is permitted on the ABC's external TV service and there is continual pressure for the ABC to take advertisements or to compromise its independence in other ways. If the ABC were funded by advertising, who then would be able to scrutinise mega-businesses?

Overseas experience.
The New Zealand government permitted advertising on the NZBC. When the current Labour Government came to power in New Zealand, it complained that the NZBC was indistinguishable from commercial outlets. It told the NZBC it wanted a return to public broadcasting values. That has not happened, because the NZBC now relies on advertising. The logic of this reliance compels it to follow commercial broadcasting values.

A 1999 study of public broadcasters around the world, conducted by McKinsey and Co, found that the greater the degree of advertising on public broadcasters, the less distinctive they were from their commercial competitors. Thus RAI, in Italy, which gets a large proportion of its funding from commercial activity, had a very low distinctiveness rating, while the BBC had a high distinctiveness rating.

Savings illusory.
All consumers pay for the ABC when they pay tax on goods and services, or income tax. All consumers pay for commercial media when they purchase advertised products. Commercial broadcasting is not free.

See also:  Friends of the ABC submission to the Senate inquiry into ABC Online