Media Lab forces €35m write-off

THE Government yesterday said it will be forced to write off €35 million of its investment in Media Lab Europe (MLE), the digital media research centre that was the centrepiece of the Digital Hub project.

The board of MLE announced yesterday that the company was going into voluntary liquidation, after the two partners behind the project the Government and the Massachusetts Institute of Technology could not reach agreement on future funding models.

MLE was established in 2000 as the flagship project of the Digital Hub.

The Hub concept was strongly backed by Taoiseach Bertie Ahern and the inclusion of a European version of the renowned MIT media lab was seen as essential for its success.

However, MLE suffered initially as a result of the collapse in the dotcom sector and the Government's intentions that it be self-financing never materialised.

A consultant brought in to examine the company last year identified problems in relation to governance of the firm, particularly the lack of momentum that arose out of the Government and MIT holding equal shares in the venture.

There were also differences over the future direction of the company.

The Government's view that the research should have more direct commercial application was not shared by MIT.

Yesterday, Communications Minister Noel Dempsey accepted the State's investment of

€35 million in current spending would not be recouped, but that some of the €22m spent on buildings and equipment could be recovered. He said it was agreed that MLE would be self-financing from an early stage.

"Regrettably, this has not happened to the extent anticipated," but Mr Dempsey said it did not follow that the closure of MLE meant the Digital Hub, based in Thomas Street, was now a white elephant.

"The digital hub has taken off in spite of what happened with MLE. There are 40 companies located there with about 400 employees.

There is a fantastic digital community there with great inter-action," he said.

While accepting the Government has taken a €35 million hit in "hard cash terms", Mr Dempsey said the success of the hub had helped bring in downstream investment from companies like Google.

"The major lesson we have learned from this is that you cannot just do the esoteric research. It has to be tied with a commercially-driven purpose," he said.

The closure will see 60 jobs go. At one stage it had more than 100 employees.

Since 2000, the project received €35m from the taxpayer and a further €12m from private investors.