The ABC’s tight budget may lead to Foxtel losing $4m a year as the national broadcaster pushes to sever a costly retransmission deal with the News Corp pay TV platform.
The managing director of the ABC, David Anderson, told staff he wanted to stop paying the retransmission fees as he looks for ways to meet the funding shortfall imposed by the Coalition’s $83.7m “indexation pause”, as first reported by Nine newspapers. Anderson has to find $14.6m in the next financial year, hopefully without cutting programming and jobs.
A spokeswoman for the ABC confirmed the negotiation with Foxtel was under way.
“The ABC is considering various savings measures to meet funding cuts with minimal impact to our content, services and staff, in accordance with our ongoing obligation to find efficiencies,” she said.
“We are currently in discussions with Foxtel regarding the costs associated with the retransmission of ABC services.”
A 2014 efficiency review of the ABC and SBS, ordered by the former communications minister Mitch Fifield, recommended the public broadcasters stop paying the $6m for retransmission of their channels on Foxtel.
Anderson has long indicated that more jobs were likely to go to “free up” as much money as possible for content.
“Despite extensive requests from the ABC, the budget papers locked in the $83.7m pause in indexation funding flagged in last year’s budget,” Anderson told staff in an email after the election.
“The cut comes into effect at the start of the next financial year, with a first-year impact of $14.6m. This is on top of the $254m the ABC has had to absorb in efficiency cuts over the past five years.”
The ABC has a “Foxtel Retransmission Deed” under which it is bound to pay for satellite costs and Foxtel agrees to retransmit the ABC on its pay television service.
A former ABC managing director, Mark Scott, said in 2014 that if Foxtel didn’t carry the ABC channels it would impact content. However, the landscape has changed considerably since then. Foxtel has been challenged by streaming service Netflix and other players which have comparatively low monthly subscription charges.
Recent News Corp results show that “churn”, which is the number of users giving up their subscriptions, has risen from 14.5% to 15.6% while the average spend per customer has fallen by 3% to $78.
The ABC is struggling to provide all its services with a diminishing budget. Funding to make content has declined by 28%, or $336m, in real terms since the mid-1980s.