RTÉ - A broken broadcaster?

RTÉ - A broken broadcaster?

Shrinking revenues and a massive swing to digital are two of the factors that have created a huge funding gap for RTÉ. Unfortunately, there’s no end in sight to the problems, writes Kevin O’Neill

RTÉ's financial situation is "not like anything" the broadcaster has seen before and it simply cannot continue to operate as it currently is.

In no uncertain terms, director-general Dee Forbes laid bare the stark reality facing the broadcaster in an email to staff just over a week ago.

Commercial revenues are down and the Government's decision to not increase the licence fee to include all forms of broadcasting leaves few options to plug the gap.

RTÉ recorded its fourth consecutive deficit in 2018 and there are no obvious signs of growth since.

Income levels have reduced by €100 million in the last decade, a reality which has further compromised RTÉ's ability to "invest in its programming and services", according to Ms Forbes. Writing in the annual report for 2018, she described this as "unsustainable".

It is bleak. And, perhaps of most concern, it is not the first time that such a statement came from RTÉ chiefs in recent years.

Downsizing, redundancies and digital-first have been the mantra for a few years now and little progress has been forthcoming.

In March 2017, RTÉ director-general Dee Forbes outlined her vision for the future of the organisation in a briefing that was dubbed 'Dee-day'. She told hundreds of staff that it was about "relevance and survival".

RTÉ would have to become smaller and "more nimble", while money would also be raised through land sales, including a €75 million package in Montrose.

Two-and-a-half-years later, RTÉ has shed hundreds of staff, land has been sold off and is set to be redeveloped into apartments and the picture remains as murky.

Last week's email was the latest indication of how bad things were, coming just two months after the organisation's annual report for 2018, which also called for radical change in funding and operating models.

"With commercial revenues and public funding both significantly below what is needed to operate the organisation in its current form, our current financial situation is not like anything we have seen before.

As a result, it will no longer be possible to continue as we are," Ms Forbes told staff.

In this context, the Executive, together with the RTÉ Board, has been reassessing everything we currently do and what we can continue to do in the future. This review is almost complete and we will share details as soon as we practically can.

This review is due to be released at the start of October.

What it holds is yet to be confirmed but it is expected to be a broad reformatting of the organisation, including further redundancies, salary cuts and, most likely, a dismantling of much of what RTÉ provides in the way of public services.

No details have yet been provided how additional spending cuts would be achieved but it is understood that it will likely impact its ability to deliver on regional activities, sport, external commissioning, Irish language support, orchestras, special events, archives and genres including drama, arts, education and religion.

An internal consultant review said that potential legislative changes might be necessary to pass the burden of some of what RTÉ is required to provide as a public service to another department.

For example, would the broadcaster's two orchestras be more at home under the remit of the National Concert Hall?

Regional coverage has also been mooted as a potential area for savings.

As a media organisation, it starts the year with a €180 million competitive advantage over its rivals. And, despite this, it seems intent on shaving off regional services.

In RTÉ's annual report for 2018, Ms Forbes wrote that news has never been more important.

"Public-service media stands against the tide of misinformation, commercial self-interest and incomplete reporting.

"At a time when media services everywhere continue to fragment and struggle to survive, the mission and purpose of public-service media has never been more important and more relevant," she said.

Ray D'Arcy.
Ray D'Arcy.

However, this is at odds with a statement issued by Damien Tiernan, former south-east correspondent, who left RTÉ after 23 years to take up a position with Waterford radio station WLR FM earlier this year.

He disparaged the situation faced by regional correspondents and criticised the regional section of RTÉ's website and app, describing them as "a joke", though RTÉ news managing director Jon Williams said that they did not accept the arguments made by Mr Tiernan at the time.

In the UK, the BBC, which also receives significant state funding, spend £8 million a year on the Local Democracy Reporting Service, which funds 136 journalists employed by regional news organisations.

While the organisation has resisted efforts to increase this number, it was reported earlier this year that they want to establish a charity called the Local Democracy Foundation to replace it, paying for local journalists to cover council meetings, local crime and other local stories.

The criticism from Mr Tiernan - and others reliant on the regional services - together with Ms Forbes' own claims that public service media has never been more important certainly prompts questions about RTÉ can and should provide.

Speculation is rife that regional and language services could be on the chopping block but as a publically-funded operation, should these not be among the safest tents of the entire operation? If they go, where does the alternative come from?

These are the hard questions for RTÉ bosses: they are straddling a line between commercial viability and public service responsibilities.

If RTÉ cuts Irish language services, religious programming or sport, who fills that void?

Put the question to the general public about where RTÉ should make its cuts and you can almost guarantee that the answer is salaries.

Top names like Ryan Tubridy, Ray D'Arcy and others are often in the firing line and it is no surprise. In 2016, the most recent figures available, the top ten earners at RTÉ took home a combined €3,029,589.

Tubridy remains top of that list, taking home €495,000, with D'Arcy installed as the second-highest earner since he moved from Today FM.

He was paid €450,000 in 2016 but said this week that he would take a pay cut as he is "acutely aware" of the pressures facing RTÉ. D'Arcy's contract is currently up for discussion.

But, even if RTÉ negotiated substantial pay cuts for everyone on that list, it would not come close to tackling the deficit at the station.

As noted, that top ten, which include the likes of Marian Finucane, Claire Byrne, Joe Duffy, Sean O'Rourke and George Hamilton, as well as Tubridy and D'Arcy, earned a combined €3 million. RTÉ's deficit in 2018 was €13 million.

Additionally, as of the end of 2018, RTÉ had 1,822 employees on its books. That was an 8% reduction from 2017 as 160 people had departed the organisation through voluntary redundancies. Some of these are contractors and most are ordinary working staff, nowhere near the paygrades of the names listed above.

Downsizing has been an aim of the organisation for a number of years now and with deficits continuing - 2018 was the fourth consecutive year recording one - it is likely that bosses will invite several hundred more voluntary redundancies throughout the organisation.

However, RTÉ is very reluctant to move toward mandatory job losses.

"RTÉ is not currently planning for compulsory redundancies and we remain absolutely committed to sustaining employment. Our aim is to save public service media in Ireland, for the public and for our audiences, and protect it for the future," a spokesperson for RTÉ told the Irish Examiner.

Ryan Tubridy at a recent launch for RTE television. Picture: Leah Farrell/ RollingNews.
Ryan Tubridy at a recent launch for RTE television. Picture: Leah Farrell/ RollingNews.

It is understood that RTÉ bosses feel that mandatory cuts would severely damage morale and, potentially, lead to union disputes.

The broadcasters financial difficulties go beyond staff salaries, though. Operating costs, while reducing, were approximately €330 million in 2018, while RTÉ pinned the blame for its €13 million deficit on the cost of staging special events like the Papal Visit, the Presidential election and the coverage of the 2018 FIFA World Cup.

These three events cost a combined total of €7.2 million.

Commercial revenues are on the wane too, dropping by 1% as "Brexit uncertainty continued to curtail advertising spend" and changes in media consumption habits continued to have an impact on the Irish advertising market, though both radio advertising and digital advertising increased on the previous year.

Licence fee income also increased by €3 million from 2017, with €189.1 million recouped through the fee for RTÉ. However, it is highlighted as an obvious area for improvement and has sparked much of the current discussion about cuts.

Evasion levels are 14% which are significantly higher than other European countries - in the UK, just 6.5% of people skip the payment, while in Germany this figure is just 2% - while collection costs in Ireland are also double than some other countries.

The Government's decision to tender for a new licence collection service in August was welcomed. However, not extending the remit to cover a general broadcasting charge has prompted concern in RTÉ, with Ms Forbes specifically pointing to this as a factor in the forthcoming organisational review.

It is now estimated that 10.6% of homes do not have a traditional television set and, as such, the tv licence fee structure is less relevant as an income source.

In RTÉ's annual report, it was written that the mechanism "reflects less and less how people consume public service content" and it is a picture that is only going to become more complex in the coming years.

Netflix has moved from a peripheral player to a household name in just a few years and they are set to be joined in the marketplace by Apple and Disney, both of whom will launch streaming services before the end of the year.

While there is no Irish release date for either yet, it is another challenge for RTÉ to reckon with in the coming years.

Disney, in particular, is likely to pose a challenge, bringing with it an enormous library including its own classic films and everything from the Marvel Cinematic Universe to Pixar, Star Wars, National Geographic and 20th Century Fox.

With these weighty players joining the fray, the move away from traditional TV watching is likely to escalate rather than slow, providing a major problem for RTÉ. If their price point is comparable to Netflix - in the region of €10 per month - many will see these as far better value than a TV licence.

RTÉ is not alone in its situation, of course. It is a challenge facing public broadcasters the world over, not least in the United Kingdom where BBC chiefs have spent the best part of a decade making similar speeches about digitisation, relevance, cuts and licences.

The BBC must prepare for a digital future, its director general Tony Hall announced in March.

He wanted the iPlayer catch-up service to become a rival to Netflix; a lofty ambition.

Mr Hall conceded that they have lost the advantage they had when they launched their service a decade ago.

Competition has worn down the gap between the iPlayer and streaming services and viewers are abandoning traditional TV viewing in their droves.

Projections from Enders Analysis indicate that 50% of video viewing in the UK in 2026 will be on streaming services, not traditional TV channels, and with Apple and Disney entering the market in the coming months, it is not hard to see what these people will be watching.

Claire Byrne.
Claire Byrne.

The analysts predict traditional channels such as BBC One and ITV will become the preserve of older viewers who are used to watching shows at a fixed time, with younger consumers switching to on-demand viewing and services such as YouTube, Netflix and others.

In an effort to boost their coffers, Mr Hall has sought an increase in the licence fee which, in the UK, is payable by all households who can watch or record live tv, including those who do so via the internet.

The Broadcasting Authority of Ireland has repeatedly recommended an increase in RTÉ's public funding to address the "inadequate levels" of funding RTÉ receives to meet its objectives as a public service broadcaster.

Broadcasters sought a €55m funding boost to finance an ambitious plan to transform the organisation into a digital-first operation, diverting money from television and radio into its online operations.

This would have brought its total Exchequer funding to more than €240m per year, though the Government has confirmed that no such funding increase is coming.

With confirmation that the licence fee structure will not be extended to cover a general broadcasting charge, RTÉ bosses now face a stark reality of cuts and reorganisation.

How this tallies with their need to become more digital-focused and more competitive with new rivals in the broadcast market remains to be seen, though.

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