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ABC and SBS face cuts while budget sees Australia Network scrapped

Public broadcasters the ABC and SBS will face cuts of $43.5m to their revenue with the ABC also losing its 10-year contract for the Australia Network which is worth $223m, the government announced last night as part of the federal budget.

Minister for Communications Malcolm Turnbull said the cuts were a one per cent reduction in the base funding of the broadcasters and represented a “down-payment” on back office savings identified following the recent government efficiency review conducted by former Seven CFO Peter Lewis.

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Both public broadcasters have  signalled their disappointment with the cuts with the ABC’s managing director Mark Scott claiming the cuts would lead to redundancies and a reduction in services.

“The funding cuts will be disappointing for audiences. The government gave repeated commitments before and after the election that funding for the Corporation would be maintained,” said Mark Scott, managing director of the ABC.

“The task ahead will be extremely challenging for ABC management and staff. We will need to make funding cuts, while trying to also save money to invest in new priorities to ensure the ABC remains a compelling feature of the Australian media landscape – a public broadcaster in the digital era.”

Scott also signalled his displeasure with the widely anticipated decision to terminate the ABC’s contract to run the Australia Network, which broadcasts to 44 countries across the Asia Pacific. Budget papers show that decision is expected to save $196.8m over nine years.

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 “It sends a strange message to the region that the government does not want to use the most powerful communication tools available to it to talk to our regional neighbours about Australia,” he said.

“The agreed strategy with DFAT based on broadcasting, online partnerships and social media was proving successful. This decision cannot be justified in terms of performance against agreed priorities.”

Multicultural broadcaster SBS has also signalled its concerns about the financial cuts arguing it is underfunded and that the $2m budget cuts will have a broader impact on revenue.

“SBS is already a lean and underfunded organisation and as such the $2 million per year funding cut announced in tonight’s Budget will be felt across the organisation. However, we fully recognise that this is a tough Budget,” said managing director Michael Ebeid.

“We would be concerned should there be a further reduction in our funding as this would invariably impact on our content and audiences and, in turn, on our commercial revenue.”

Turnbull justified the cuts as important to helping to move the federal budget out of deficit but warned the broadcasters not to cut programming or services.

“The Government is determined to repair the Budget so that we can build a stronger economy. All government bodies must play a part in achieving that goal,” said Turnbull. “The Government is confident the broadcasters can improve work practices and operate more efficiently in their day-to-day operations.

“Critically, the Government expects those efficiencies can be achieved without cutting their diverse range of programs and services or affecting their editorial independence.”

The cuts have been condemned by the Media Entertainment and Arts Alliance and activist group Get Up! who both noted that the Coalition had promised prior to the election not to cut funding to the public broadcasters.

Nic Christensen 

Minister for Communications statement:

The ABC and SBS are an important part of our national life. The Government wants to ensure a strong, healthy, and resilient public broadcasting sector that efficiently uses taxpayers’ money.

The Government earlier this year instituted an Efficiency Study, to review ABC and SBS operations. This was to ensure they run their organisations as efficiently and cost effectively as possible without impacting on the quality and range of programming.

The 2014–15 Commonwealth Budget includes a one per cent saving on base funding as a down-payment on back office savings identified and being considered by the Government and the public broadcasters over the coming months.

This budget measure does not constitute an ongoing efficiency dividend on the ABC and SBS. The exact implementation of the savings arising from this measure will be determined by the boards and executives of the national broadcasters.

By sharing the load, we lighten the load.

The Government is determined to repair the Budget so that we can build a stronger economy. All government bodies must play a part in achieving that goal.

The Government is confident the broadcasters can improve work practices and operate more efficiently in their day-to-day operations.

Critically, the Government expects those efficiencies can be achieved without cutting their diverse range of programs and services or affecting their editorial independence.

Achieving these efficiencies is part of the Abbott Government’s Economic Action Strategy to build a strong and prosperous economy for a safe and secure Australia.

ABC Statement: 

The ABC’s budget will be cut by $120m over the next four years as a result of decisions made by the Federal Government in tonight’s budget.

Operational funding cuts of close to $40m over four years will come on top of the termination of the $220 million contract to deliver the international broadcasting service, Australia Network.

The 2014-15 budget also foreshadows further significant funding cuts in the wake of the Lewis review into the operations of the ABC and SBS.

“The funding cuts will be disappointing for audiences. The government gave repeated commitments before and after the election that funding for the Corporation would be maintained,” the ABC’s Managing Director, Mark Scott said.

Mr Scott said while the ABC would look to make its operations more efficient, the funding cuts would regrettably and inevitably result in redundancies and a reduction in services. The ABC Board and Executive would need time to work out the full impact and to review strategies and internal budgets.

Mr Scott said the decision to cut the funding for Australia Network was very disappointing, given the ABC was only one year into a 10-year contract with the Department of Foreign Affairs and Trade.

“Countries around the world are expanding their international broadcasting services as key instruments of public diplomacy. The ABC had negotiated a detailed strategy with DFAT to develop relationships with major broadcasters in the region and to target locals likely to trade, study in or travel to Australia. This partnership had resulted in expanded audiences in key markets and was on track to deliver all agreed targets.

“This decision runs counter to the approach adopted by the vast majority of G-20 countries who are putting media at the centre of public diplomacy strategies to engage citizens in other countries.

“It sends a strange message to the region that the government does not want to use the most powerful communication tools available to it to talk to our regional neighbours about Australia.

“The agreed strategy with DFAT based on broadcasting, online partnerships and social media was proving successful. This decision cannot be justified in terms of performance against agreed priorities.”

Mr Scott said the ABC Board would now have to examine how the ABC delivers its international Charter obligation, which requires it to broadcast programs that, among other things, “encourage awareness of Australia and an international understanding of Australian attitudes on world affairs”.

In addition to the funding cuts, the ABC will also have to manage the cessation of funding for the online disability website, ABC Ramp Up at the end of this financial year.

Mr Scott said the ABC was aware of the tight fiscal environment and constantly reviewed its strategy and performance to find better work practices and greater efficiencies.

“The ABC is very tightly geared. We have been diligent in reducing backroom costs over recent years to ensure the ABC can deliver better and more varied content to our audiences.

That strategy has enabled the ABC to self-fund important new initiatives like iview, ABC News24, ABC Unearthed and a range of other new digital services.”

Mr Scott said the budget made it clear the Lewis efficiency exercise would impose additional demands on ABC budgets over the next few years. The Department of Communications has been conducting a study into ABC and SBS efficiency with the assistance of ex-Channel 7 CFO and recently appointed COO of Austereo, Peter Lewis.

“The task ahead will be extremely challenging for ABC management and staff,” Mr Scott said.

“We will need to make funding cuts, while trying to also save money to invest in new priorities to ensure the ABC remains a compelling feature of the Australian media landscape – a public broadcaster in the digital era.”

SBS Managing Director Michael Ebeid:

“SBS is already a lean and underfunded organisation and as such the $2 million per year funding cut announced in tonight’s Budget will be felt across the organisation. However, we fully recognise that this is a tough Budget.

Through various government review processes, the Board and I have demonstrated that SBS has a lean and agile culture, with innovative employees that are, by necessity, highly-skilled at delivering more with less. We would be concerned should there be a further reduction in our funding as this would invariably impact on our content and audiences and, in turn, on our commercial revenue.

As SBS does rely heavily on commercial revenues, we regularly plan for changes to our overall funding and will now identify savings to absorb this funding cut which minimises the impact on SBS content and our audiences.

SBS is an efficient organisation which delivers enormous value to the Australian community with its modest funding, and providing services that reflect our unique multicultural Charter will only become more important as Australia continues to grow in cultural complexity.”

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