The ABC and SBS could save $6m a year by refusing to pay for retransmitting their services on Foxtel and another $5.9m a year from abandoning digital radio, according to a leaked version of the still-secret efficiency review commissioned by communications minister Malcolm Turnbull.
The review also advises the Coalition to dismiss concerns it was interfering in the ABC for “political reasons” and force the broadcaster to provide annual reports justifying its expenditure of taxpayer money under a new “statement of expectations” from the government.
Turnbull has accused the ABC of using government funding cuts as “cover”, allowing it to cast the Coalition as a “bogeyman” responsible for programming changes the ABC wanted to make anyway.
He has said that the review – by former Seven West chief financial officer Peter Lewis – shows the ABC could have easily found $250m in savings over five years imposed by the government without cutting any programming.
The leaked report reveals just how much could be saved from one recommendation not yet taken up by the ABC – out of the $88m-a-year of possible cuts flagged by Lewis. It says $6m a year could be saved by refusing to pay a fee for carrying the ABC and SBS on the Foxtel pay TV service.
In 2005, the ABC entered into a 10 year “Foxtel Retransmission Deed” under which it is bound to pay for satellite costs. To meet this obligation it pays Optus for satellite capacity and in return Foxtel agrees to retransmit the ABC on its pay television service. The ABC can’t exit this agreement until February next year.
This would require the ABC and SBS to call Foxtel’s bluff – betting it would carry their channels anyway, or at least that Foxtel subscribers would still seek the stations out if they weren’t on the Foxtel service. It would also pose a risk for Foxtel – jointly owned by News Corp and Telstra – that commercial broadcasters could follow suit and also refuse to pay.
Asked about it in Senate estimates last week, ABC managing director Mark Scott said he understood the merits of the argument, and it was backed by Turnbull, but he said if Foxtel then refused to carry the ABC, it would end up having an impact on content.
“I think there is real merit in what Mr Lewis has argued here. But we still need to be able to think through what the content impacts are of making efficiency decisions,” he said.
Announcing the ABC cuts last week, Turnbull said he would be issuing a “statement of expectations” – “carefully balanced against the statutory independence of the ABC and SBS”. In a carefully worded response, suggesting possible future tensions over the issue, the ABC board said that “when such a statement is received, the board will consider it as required by the Act”.
The Lewis review reveals a clear understanding of the acute sensitivity surrounding such a “statement of expectations” from the communications minister to the ABC and SBS.
It says the statement “could give rise to concerns that the government is intervening … for political reasons” but argues the move would also overcome the current “tension” between the minister’s “limited capacity to make the broadcasters aware of government policies, and the necessary constraint that ministers cannot influence editorial decisions.”
“However, provided it was carefully constructed and ‘within legislative scope’, the study considers a statement of expectations would assist the boards to clearly understand the efficiency and financial outcomes the government is seeking from the annual investment of taxpayer funding,” the review said.
The statement of expectations should be made public, and could require the broadcasters to “report annually to the ministers in regard to specified categories of resource allocation” and about how their allocation of resources meet the specific objectives of the ABC and SBS charters.
Turnbull has said he believed “the ABC and SBS should so far as possible seek to be as transparent as a public-listed company” because “the best cure for suspicion is sunlight”.
The review also found the ABC and SBS could save $5.9m a year from ceasing digital radio transmission, but this would require a change in government policy and the breaking of a 15-year contract with Broadcast Australia – imposing a large upfront cost of $20m.
Among other recommended savings are:
- $3.4m from abolishing the ABC Splash digital education website. “It is understood the ABC will not continue to support ABC Splash when the government funding lapses in 2014,” the review said.
- $200,000 a year from charging for iView and SBS-view catch-up services, either by pay-per-view after a period of free access, charging for high definition but not standard definition content or charging for archival content. The ABC has said it will charge for archival content and for currently running programs after 14 days.
- $15.6m a year from increased advertising on SBS
The ABC angered many Liberal and National MPs last week by announcing the closure of five regional radio offices. The review appears not to recommend savings from regional radio, saying there were “no material efficiencies to be gained in this area” and “in the absence of commercial providers, the ABC’s local radio service is relied upon for local news, this requires a physical presence at the local level”.
But Scott has argued the five regional radio offices had only four staff working in them, were not responsible for any broadcasts and were all within an hour’s drive of a larger ABC office.
The Department of Communications has published an executive summary of the Lewis review, without any savings figures, on its website.
Scott will appear again before a Senate estimates committee Monday and it is understood the government is also likely to formally release the full Lewis review.
The ABC has announced 400 staff will lose their jobs, the closure of its Adelaide production unit, the abolition of state-based 7.30 reports and cuts to foreign bureaux.
