[Update: This afternoon, Communications Minister Malcolm Turnbull announced that ABC funding would be cut by $254 million over five years, as well as a $54 million cut in SBS’s funding. Turnbull explicitly addressed the issue of Tony Abbott’s pre-election commitment not to cut ABC and SBS funding, saying it needed to be considered in “context” and that the commitment related to funding cuts, not to “savings”.]

With Communications Minister Malcolm Turnbull set to reveal the extent of the government’s slashing of ABC and SBS funding today, an array of media experts on cost-cutting have emerged to lecture the national broadcasters on how they can save several hundred million dollars without really trying, including from Fairfax and News Corp, which know an awful lot about cost-cutting but not much about operating profitably

“The ABC is so flush with assets it has a $20 million property in Sydney used to park trucks and store costumes,” the The Daily Telegraph suggested. “Commercial television networks have dismissed proposed cuts to the ABC as ‘a glancing blow'”, Fairfax reported, accusing the national broadcaster of being stuck in a “time warp”. Fairfax spoke to Hamish McLennan, executive chair of the Ten network, a perennial loss maker, with over $350 million in write downs in the past two years and close to $400 million in total losses, and about to be bailed out by the Murdoch clan’s Foxtel/News Corp. Moreover, the ABC has been regularly beating Ten in the TV ratings now since midway through 2012 and each year produces more original TV content than Ten does, with less resources. What does McLennan have to offer?

Tim Worner, the CEO of Seven West Media, was more circumspect than McLennan, but did say Seven had ring-fenced content in its cost cutting — even though Seven has cut programs such as the late news, the 7pm news on 7TWO and eliminated Today Tonight in east coast TV markets. Then there’s Foxtel chief executive Richard Freudenstein, who told Fairfax that a 5% cut to the ABC and SBS’s funding “doesn’t sound like a ridiculous target” and it should not threaten programming. “I’d like to think,” Freudenstein opined, channelling Turnbull, “that the ABC would be able to look at some of their back office inefficiencies, look at the way they do things.”

And today, most amusingly, Education Minister Christopher Pyne — who presumably has some say in the level of national broadcaster funding — has urged the ABC to spare its Adelaide TV production facilities with an online petition. Maybe it’s the South Australian background, but you’d think a senior minister of a government committed to greater public sector efficiency would be supportive of the ABC cutting less efficient, decentralised production in favour of Sydney and Melbourne, where economies of scale would be available.

Newscorp and Fairfax are hardly disinterested organisations when it comes to the ABC — nor are the TV company executives that their reporters approached for advice, and nor is the TV cartel lobby group, Free TV Australia. All compete, often unsuccessfully, with the ABC for ears or eyeballs in the digital world. For far less money, the ABC has proven itself to be far more adaptable to the rapid pace of secular change hitting established media from the evolving digital world. In fact the old line media, from Seven West Media, to Ten, to Foxtel, to Fairfax Media, have looked like rabbits in the headlights in their inability to cope with the dramatic changes happening in the media. Seven West Media’s creation by major shareholder Kerry Stokes was valued at $4.1 billion in 2011. Yesterday it was worth $1.67 billion. But at least it’s profitable. Foxtel, owned by News Corp and Telstra, is also profitable, but it’s a monopoly which rather disqualifies it from discussing competitive markets.

Then there’s the simple matter of disclosure. We know how Fairfax, Seven West Media and Ten perform because they issue accounts and financial reports. We know how the ABC is going because it issues annual reports and its executives are grilled in the Senate estimates. But News Corp Australia doesn’t issue accounts, refuses to tell us how it’s going except in terms of platitudes, and threatened to sue Crikey when we revealed its internal accounts. Even Foxtel’s performance is filtered through the inadequate disclosure laws of the US (where the parent, News Corp is based). News Corp Australia keeps rabbiting on about the rights of taxpayers to know what the ABC is doing — it pays very little, if any, corporate tax because of its losses (and huge tax losses) on its accounts.

One more point: ABC managing director Mark Scott refrains wherever possible from giving his rivals the sort of cheap advice he got this morning. The executives of News, Fairfax (run by $2 million man Greg Hywood, without a single profit), Ten, Seven and Free TV Australia, not to mention Foxtel, would rightly be upset if Scott started lecturing them on their manifestly inadequate performance. Maybe it’s good manners. Or Scott is happier to let his outfit’s performance do the talking for him.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey