Further cuts to the ABC budget, first flagged in May, are shaping up to be far larger than expected, with insiders describing the situation as “very dire”.

Numerous sources have told Crikey the ABC and Communications Minister Malcolm Turnbull had been close to announcing a negotiated cut of $50 million. This would be close to the 4% figure reported in The Australian in June. However, Crikey understands this was seen as insufficient to other members of the government — in particular the cabinet’s expenditure review committee (ERC). The situation remains very much in flux, but figures as high as a $100 million cut are being floated. A cut of that magnitude would remove nearly 10% of the ABC’s funding and come on top of the 1% cut to the ABC’s recurrent funding announced in the May budget.

ABC sources have described the situation as “very dire”, and say that while they don’t know the full quantum of cuts yet, early figures have them very concerned. The Lewis Review into ABC and SBS efficiency, an executive summary of which was leaked to Fairfax and News Corp, reportedly showed how the ABC could save $70 million through back-room efficiencies and by outsourcing production to the private sector. However, many within the ABC doubt even the review shows the roadmap to $70 million in savings, as not all of its suggestions can be implemented at the same time.

One ABC source told Crikey the ABC had been preparing for 500 job cuts off a $50 million blow to its budget. Higher job losses can be expected if a higher cut goes ahead.

Crikey asked Turnbull’s office whether a recurring budget cut of $50 million had been rejected by cabinet and the expenditure review committee. Crikey also asked whether the ABC budget cut would require significant job losses. A spokesperson told us: “As ABC and SBS management know very well, following the completion of the Lewis Efficiency Study in which their finance executives assisted, there is more than ample capacity for the national broadcasters to achieve substantial savings without reducing the resources available to program production or acquisition.”

Turnbull’s office also disputed the suggestion that a $50 million figure had been agreed upon and rejected by the expenditure review committee.

The ABC declined to comment.

Turnbull has a history with the expenditure review committee on this issue — in June, Fairfax reported that the minister lobbied against the ERC’s consideration that ABC and SBS should be subjected to an efficiency dividend.

In earlier correspondence with Crikey, Turnbull made pointed comments about the management of the public broadcaster.

“A commercial broadcaster’s revenues are a function of its ratings. A public broadcaster’s revenues are a function of its lobbying skills,” he said.

“If a commercial broadcaster has to cut costs, they will do their utmost to avoid diverting resources from programming lest ratings and thus revenue decline. A public broadcaster can cut costs most readily simply by cancelling programs.”

To this end, Turnbull said, he was keen for the ABC to make actual cost savings to its base operating costs, hence the commission of the Lewis Review. “The Efficiency Study was designed to encourage the public broadcasters to make the tougher, but more worthwhile, decisions to save costs by cutting waste and inefficiencies which will enable them to significantly reduce their cost base over the long term,” Turnbull said.

Crikey understands such preparations for back-end cost-cutting are already under way. Within SBS, for example, we hear there have already been redundancies in the IT support and broadcast departments as its managers visit the ABC to discuss the sharing of such functions.

Many are expecting the final budget cut to the ABC to now be announced in December, during the government’s mid-year economic and financial outlook statement.