There is consternation and some pissed-offedness within the senior management at the ABC this morning over Senator Stephen Conroy’s  unforced remarks to ABCNews24 yesterday questioning this week’s decisions about cuts to ABC programs and resulting redundancies.

Conroy said that the ABC hadn’t had any cuts to its funding, and that of course is true. It is also not the issue, as he well knows — or should well know. Make no mistake, Conroy was briefed about this week’s announcements ahead of time.

So what’s going on? There is a back story to this week’s announcements. At one level that back story is about the ABC’s structure, funding and financial arrangements, and its future hopes. The public broadcasters are fast approaching crunch time — the 2012 triennial funding decisions.

And there is an even bigger back story about Australian content more broadly, and what will happen to it over the next few years. To cut to the chase, we could be seeing — right now — a high-water mark for Australian content on television if nothing is done to change current trajectories.

And Conroy should know all these things. If he doesn’t know, then there is a real question about how he is being briefed about the ABC’s difficult financial position.

Those difficulties are not about funding cuts but rather  increased competition and costs in buying programs — a consequence of the advent of digital multichannels — and a downturn in revenue from the sale of DVDs and other commercial products. That is partly about the lack of a DVD hit such as Kath and Kim or a Summer Heights High, and partly in line with the dire state of retail more generally.

Given that Conroy was briefed in advance of this week’s announcements, what message was he sending yesterday?

A glass half-full interpretation, from the ABC’s point of view, would be that Conroy, always an ABC advocate, is softening up his cabinet colleagues in advance of the extra tough 2012 triennial funding submission.

Another interpretation would be that in a stoush between the powerful Commonwealth Public Sector Union and the ABC, Conroy is not going to be seen to take Aunty’s side — whatever he is doing behind the scenes.

And another theory doing the rounds internally is that there has been some flaw in the way ABC management is keeping Conroy briefed and informed.

So, to the back story. Why have these decisions been made?

Every time the ABC makes changes to its programming, it pisses off those groups with attachments or vested interests in  particular programs, and the charter is trotted out every time, never mind that it is broad enough to mean almost anything to anyone.

My own point of view is that The Inventors and Collectors had run their course, and providing there is delivery on the promise to retain arts coverage on television, the Sunday afternoon arts program is not necessarily a devastating loss on its own. True, the ABC should not be ratings driven, but it should have heed as to whether programs are truly serving their target audiences.

The more important issue — the one that is about more than natural changes in programming line up — is about the redundancies, and what they represent in terms of reduced capacity for the ABC to produce good programs in-house and outside Sydney.

Here are the constraints. The unintended consequences of the advent of digital multichannels in Australia is that the cost of buying quality overseas content has skyrocketed, going up by 30%-40%.

That means that BBC and other programs that once would have been core ABC content are now going to commercial television, because Aunty simply can’t compete on price. Downton Abbey, which went to Channel Seven, is one example quoted to me by ABC sources. It would have sat well with the ABC, but Aunty had to drop out of the bidding at a very early stage while the commercial channels raided the BBC catalogue.

What to do, given that no government can or should  justify giving out cash to public broadcasters for buying overseas content?

Nor can the ABC take money away from Australian content to give to buying overseas programs — not that it would want to. The last funding increase achieved by Mark Scott was tied to the increased screening of Australian produced drama. We are now seeing the fruits of that increase with ABC programs such as Crownies (love it or hate it) and soon The Slap.

Meanwhile, all the other costs of ABC television rise, and there are limited choices about where to find the necessary extra cash.

Those pressures mean that this week’s announcements won’t be the last. A while ago Scott announced a review aimed at trying to find the right balance between internal and external production over the next three years.

For that, read more external production, and more redundancies. I expect to see forthcoming announcements about the outsourcing of local sports coverage. That will cause an outcry as well, and understandably for those who already — rightly —  criticise the ABC for being too Sydney-centric.

Meanwhile, there have been board discussions on this and other issues to do with how the limited pots of money that are not tied to particular spending are moved around.

So what would happen if the redundancies were not made? If the staff just let go were kept on? The alternative might be cuts to entertainment programs such as The Gruen Transfer. There are no easy answers.

All this is the subject of hot contest within the ABC, but the pressures on Scott are for more drastic restructuring of the way ABC money is spent, rather than less. The trends are clear. Fifteen years ago, four hours of programming was being produced in Western Australia every night. That is never going to happen again.

Now, if Conroy isn’t across all this, then it would be very surprising. The real question for him is what he is able and willing to do about it, in terms of the triennial funding round.

Keep in mind that this round of triennial funding for the public broadcasters is likely to be the last under the present government. While it is not unknown for conservative governments to take care of the ABC, it is probably safe to assume that an Abbott government would be tougher on Aunty and SBS than Labor and the Greens will be.

Keep in mind, also, that whatever the ABC’s problems, SBS is in worse and more urgent shape, and with less capacity to shift money around and rob Peter to pay Paul.

So 2012 represents something along the lines of the best last chance, yet is also going to be extremely tough. The government is committed to returning to surplus. It has made it clear to the current Convergence Review that it does not have a bucket of money to tip into increasing levels of Australian content production.

Yet at the same time the Convergence Review committee clearly regards the quota system, under which commercial broadcasters are obliged to screen certain amounts of local content, as dead, given that providers of television over the internet are subject to no such requirements.

So what will happen to Australian content and drama at the public broadcasters? If the ABC and SBS don’t get more money, or at least retain existing levels of funding, then what we are presently seeing and about to see on our screens could be the high-water mark for Australian content on the public broadcasters.

Meanwhile, if there is no more general untied ABC funding, cuts will have to be made somewhere, and every cut will be tough and contentious.

So, from the ABC’s perspective it is all about the least worst option. And that would appear to mean more restructuring, more redundancies and very hard questions about whether everyone in the organisation and in the states is essential to the future of the organisation.

Mark Scott recently signed on for another five years at the ABC. While his achievements have been considerable, the most difficult part of his tenure , and the part on which history will judge him, is almost certainly ahead.