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JOINT COMMITTEE ON COMMUNICATIONS, ENERGY AND NATURAL RESOURCES debate -
Wednesday, 24 Nov 2010

Competition in Broadcasting: Discussion with National Newspapers of Ireland

I welcome the witnesses from the National Newspapers of Ireland group to discuss fair competition in public service broadcasting with particular reference to the use of digital media. With us are Mr. Paul Cooke, managing director of The Star and chairman of the National Newspapers of Ireland, Mr. Liam Kavanagh, managing director of The Irish Times, Mr. Oliver Keenaghan, general manager of the National Newspapers of Ireland and Mr. Frank Cullen, co-ordinating director of the National Newspapers of Ireland.

Members are reminded of the long-standing parliamentary practice that members should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they give to the committee. If they are directed by the committee to cease giving evidence in regard to a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Mr. Frank Cullen

We thank the committee for giving us this opportunity to address it. The title of our presentation is The Future of Irish Newspapers in a Digital Age. The National Newspapers of Ireland is the umbrella body for daily and Sunday newspapers and we also have a regional and local arm. In total, we cover 18 national newspapers and 35 regional and local newspapers. Combined, we circulate 6.5 million copies per week and, in addition, our publishers operate a variety of online news sites and deliver content via e-newspapers, in tablet form, on specialist websites and via mobile applications.

It is worth making the point that the press industry is a major employer. We are embedded in the economy with 4,000 direct employees. That number is under serious pressure given the state of the economy and the advertising market. There are also thousands more who depend on the industry, both upstream and downstream. There are press officers, freelancers, advertising staff, marketing staff and public relations agents. Downstream there are printers, newsagents and CIE newspaper delivery drivers among others. Many people feed from the newspaper cake. Our own members have a turnover of approximately €700 million and we pay slightly more than €100 million to the Exchequer.

Traditionally news media in this country has been delivered by three major players: newspapers, television and radio. All those players are now confronted with having to deliver content not just across those platforms but on new platforms in the digital world. We must all be there but getting there is more difficult for some than for others.

There is a myth that newspapers are dead, are no longer relevant or are dinosaurs. Nothing could be further from the truth. Newspapers are in the content business, not the paper business. We deliver content, that is our purpose, and paper is no longer the only means of disseminating content. There is now a multi-platform digital world.

Content acquisition is a significant investment for all publishers. Quality journalism comes at a price and there are issues related to applying standards and maintaining press councils and other factors that make the content area expensive. It is important for the investors and those who take the risk that their copyright is protected, and the issue of copyright must be addressed. This applies to all media players, print and broadcast.

The challenge for the newspaper industry is to develop a new business model to sustain business employment in the digital world by embracing the innovations and potential of the digital age and investing in the multi-platform opportunities available to deliver content and to connect with readers. We must maximise the revenue opportunities that arise as a result. That is the challenge: to create a business model that maximises those revenues. At the same time, we must consolidate and maintain traditional revenues. Those revenues still come predominantly from printed newspaper advertising. It is difficult to generate revenue in the digital world.

There are new sources in the digital world. Media convergence is happening. Newspapers, radio and television in the past, while they competed to an extent, were on different platforms. Now, in the digital world, we are on the same platform, leading to a head-on collision in competition. There are also many new players in the market, with aggregators and news sites that avail of content produced by others. We would say that our content is being ripped off all over the place and presented by others who are then selling advertising and taking our part of the advertising cake after taking content they did not originate. No matter what I say today about our public service broadcasting, we should come together to see how we deal with Irish media players. It is vital we have proper copyright protection of content in the digital age from those who would otherwise steal it from us. All are competing for the crucial revenue and it is a very fragmented market.

In regard to public service broadcasting, NNI made a submission to the Minister for Communications, Energy and Natural Resources, which is available on our website, on a number of issues that are of concern to us. The public service remit of RTE is not properly defined as required by law. The arm's length principle is not being properly applied between its public service and commercial arms. It is giving away free publicly funded content and using it to attract readers and generate further advertising in a digital part. It is, therefore, mopping up the advertising market through bundling across its many platforms because it has the unique privilege of many platforms. It is bundling its activity to compete unfairly. Users of the RTE news website can link to specialist sites such as motor, property, dating and so on. We question that for a public service broadcaster. RTE cross-promotes across all its various platforms. That is unique to RTE because newspapers do not have that possibility.

Perhaps I can move from the script and ask the committee to think for a moment. Let us take RTE as a traditional broadcaster and, say, The Irish Times. The first question I would ask is whether The Irish Times is any less of a public service than RTE. If they wanted to set up a simple website, who would have the best chance of success? RTE has content across television, radio and publishing collected with the benefit of €200 million in State aid, 25% of which comes from the Department of Finance for those who fail to pay their licence fee by social welfare and so forth.

Who cannot afford to pay.

Mr. Frank Cullen

That 25% comes from the Department of Finance is a nice privilege. Leaving that aside, it collects the content with the benefit of the licence fee and transfers it to the online website. It is brilliant. It is fantastic content, it is visual and it is textual. The Irish Times only has its own resources based on the number of newspapers it sells and it can use that content. If one has a website one needs people to go to it so it must be promoted. RTE can call on the resources of advertising across all its platforms - national television, national radio, the RTE Guide and so on to promote its website. The Irish Times can promote its website within the newspaper but that has the effect of driving people from its printed product to its online product, cutting off its nose to spite itself. If it wants to go for outside data, it has to pay for them. In addition, the RTE website connects to all these other sites such as dating sites and so forth to drive traffic, which drives up its numbers. By driving up numbers it can attract more advertising because it can compete on a cost per thousand basis which is lower than the rest of us can offer. I would say there is an inherent unfairness there.

If one looks at this around Europe, there is no problem with RTE doing everything it is doing with its website except that the commercial activity needs to be reined in. This House has always accepted the need for limits on the amount of advertising on public service television and radio because it gets a licence fee. There are no limits on its website but there should be. This is a critical issue. RTE will say it is a commercial website. The Broadcasting Act provides that RTE shall operate a website in keeping with its public service remit. To us, "in keeping with its public service remit" means it should be a public service website. If it is a public service website, it can deliver the content by all means but there should be no advertising on it.

If it is a commercial website, as RTE would say, it should pay for the content and the advertising and then we have no argument, but it cannot have both. There is a grey area that needs to be addressed urgently. I now turn to RTE's proposed new services. If what I have said was not bad enough-----

Those in RTE are going very aggressively into the marketplace.

Mr. Frank Cullen

Very aggressively. If that was not enough, the land grab will continue.

Let us hear the opposite about RTE.

Mr. Frank Cullen

There is a land grab going on. RTE is the most commercial and more power to it. It does a brilliant job. We have the utmost respect for it but there is an inherent unfairness in what is going on. That unfairness must be addressed and the only people who can do that are in the Oireachtas. RTE is proposing a further land grab. As members are aware, a digital platform is being launched. That will allow it to multiply and quadruple the number of channels available. While we have no objection whatsoever to RTE going digital and going on a digital platform, there is a need to address the issue of public service, where it begins and ends, and the issue of commercial activity. There is a need to cap the commercial activities in this new digital world.

Additional channels mean more broadcasting time and across more channels which will create more audiences. Some of the individual audiences may be smaller but, collectively, they will be greater. More channels and more broadcast time will create more advertising opportunities. More advertising opportunities will drive down the cost of TV advertising which in turn will attract new and different advertisers. I am sorry to say it is our advertisers who will be attracted. Here again there is an issue that must be addressed. In approving the new digital proposals and channels, to which we have no objection, there needs to be a reining of the commercial activity and a cap put on this activity. Otherwise the rest of us will be out of business.

The law provides for fair competition. EU state aid rules are critical in this regard. They specify that RTE's public service remit must be properly defined, dealings between RTE's public service and commercial elements must be at arm's length, which does not happen, and RTE must not act anti-competitively. Here I would address the members of the RTE Authority. They have a duty and a responsibility as members of the authority to see that fairness exists and that they do not act anti-competitively with others. It would also be helpful if we could meet with RTE as an industry to discuss face to face our respective views.

We respect public service. Where does public service and commercial interface? Where does one begin and the other end? Let us take "The Late Late Show". I have no problem that it is a public service, that it is funded by licence fee and that it is sponsored. I do have problems, however, when RTE commercialises within the programme through raffles, audience participation, the "one for everyone in the audience" phenomenon and excessive commercial opportunities which are, in effect, advertising for those who supply those products. That is within the programme. That would not happen within a newspaper article. If it did, we would head it, "Advertising Feature". I could not imagine The Irish Times allowing Fintan O’Toole do those sorts of things. Apart from the fact that he would not do it, his editor would not allow him to either. There is an issue here.

Given that public service has been created, it needs to be defined and limits must be set on where it begins and ends in the commercial world. Are these newspapers any less public service? In terms of democratic debate and information, newspapers play an important role. Newspapers are under serious threat. Our advertising levels are back to 1998 levels. If one has an interest in the survival of Irish newspapers, this issue needs to be addressed urgently. We have a Minister for Communications, Energy and Natural Resources whose remit does not include newspapers, only broadcasting. Everywhere else there is a minister for media, and culture is usually attached to it. For example, in Britain, there is a minister for culture, media and sport. Therefore, somebody has responsibility at political and official level for fair play and considering the knock-on effects between them. In this digital world, we need this fresh approach. It is timely given the situation in which we are politically and given what might happen in the future that someone would say that we should take a fresh approach to the media and consider the media in an integrated converged digital world. I will come back to RTE to reinforce this. Is dating, motors or otherwise a public service? If it is a public service, it should not be in these spaces.

I refer to RTE apps for free. RTE launched a mobile application. I cannot find any mention of mobile apps in legislation. I do not know where that can come from. What I can find in the legislation - I refer to the Broadcasting Act 2009 - is that if RTE wants to launch a new service, it must undertake a public value test and a sector impact assessment. No such public value test or sector impact assessment took place in the case of the mobile app and I would have to ask why. RTE is on record as saying it will not charge for its mobile app. No newspaper can make that statement because it could not do that for free. We are denied entry into that space, even though newspapers have mobile apps. They will not get any takers, however, because no one will pay for them. In addition, we must charge VAT at 21% on anything we do, which is another nonsense.

I refer to cross-promotion. RTE is in a privileged position of being on television, on radio, in print, online, on teletext, involved in events and so forth. It has a range of platforms. That is a unique privilege bestowed by this House. This House denies the rest of us entry into those spaces. We would not get a licence for television, for example. We are not allowed into those spaces. RTE should, therefore, respect those individual spaces and not cross-promote across all the spaces. RTE will say some of them are commercial. If it says the online website is commercial, why should a news presenter promote www.rte.ie? It should be a public service website. If it is a commercial website, why should Sean O’Rourke, a man for whom we have the highest respect, say to go to www.rte.ie? I could not imagine Fintan O’Toole saying in his column to go to the commercial arms of The Irish Times where one will get this, that or the other. That would not happen. There is a mix here that needs to be clarified. Someone in authority must do this.

If one looks at the RTE website, there are many case histories demonstrating how powerful it is. It can offer advertisers something no one else can offer them because the State has given it this privilege. It can do things across a range of platforms but I will not go into the detail.

We should stop and think again about the digital world and about when one wants to access information. There is a reluctance among people to pay for information these days, and it is growing. Anyone online expects information for free. Online is definitely impacting severely on our traditional newspaper sales and advertising revenues. I know we live in difficult economic times but let us set aside the difficulties of the country. We charge 13.5% which is the highest rate in Europe of the traditional established countries. I think Slovenia has a higher rate. Britain, from where a lot of media competition comes into this country, has a zero rate, as do Belgium, Denmark and Finland. France has a 2.1% rate. Where there is VAT, it is at a very marginal rate. These countries have these rates because they recognise reading should not be taxed, nor should culture, education and the democratic role of the newspaper. We need some enlightened thinking.

Many of our newspapers deliver an e-paper. One can get The Irish Times or the Irish Independent online but we must charge 21% VAT. There is a reluctance to pay for anything online but charging 21% destroys the chances of any success. One can keep the 21% and get no revenue. Both of those should be the same and it should be 5%. It would be easy to argue for zero and I should do so on the grounds that many other countries have a zero rate. It would not cost the State a huge sum of money if that were addressed but it would be of enormous assistance to the industry.

I refer to restrictions on advertising. Advertising is back to 1998 levels. We should not rush down the road of trying to restrict advertising further. We are very engaged in self-regulation of advertising and advertising codes. We are engaged with the Department of Health and Children and others in dealing with that and are acting responsibly. We have put in place a lot of different measures to better manage some of the excesses that might have been there in the past. We are taking a responsible attitude on issues such as the environment. We have a recycling rate which is up from 26% in 2002 to approximately 80% through a series of measures with which we have actively engaged. Advertising is our life blood and it is important we preserve it. It is under serious attack, so we should not add to that attack.

We lack a cohesive media policy. As I said, we have a Minister for Communications, Energy and Natural Resources. His only concern with broadcasting in terms of the remit and the Department should be addressed. The Minister's role should embrace media. That is an important point for the House to address.

There is a lack of understanding which is demonstrated in the impact of media convergence. During the summer, on the day this House rose, we received a notice that on the Broadcasting Authority of Ireland website, which we are supposed to look at morning, noon and night, there was a proposal to extend the amount of time for broadcasting advertising on commercial television stations. We had ten days to respond to that. It happened on the day this House rose, so we could not raise it anywhere. We could not come to the House and say this madness should be stopped and an extension given to us. We could not get anyone of whom to ask questions or otherwise. This proposal on the BAI website was done on the basis that they had to compete with British television channels. We all compete with British everything in terms of media. It was a ludicrous proposition. There was no recognition of media pluralism or media diversity in Ireland or any idea of convergence or the knock-on effects. This was a daft idea in isolation. It showed the lack of policy. The framework is not there for media to be considered as a whole. I am not saying we have all the answers but someone needs to consider this in a more balanced and fair way. A fresh approach to the media should be the priority, which members should adopt. We live in a converged world. Let us have a Minister for the media.

I refer to securing the future for Irish newspapers. The committee should understand that we need support to embrace and exploit the digital opportunities. We are not dinosaurs. We are in the content business. Newspapers should be alive and well in the future but we will deliver content in the way the consumers want to receive it. A large part of that will be in print but they will also want it on a variety of tablets, mobiles, online and so forth. We need help from Government in that area. We met the Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe, yesterday and explained our position to him.

All Irish media need copyright protection to safeguard their creative materials. That will be very important in future, in particular given all the people who want to rip it off in this global world in which we live. We need proper implementation of the law and a fair competition framework. Irish law and EU state aid law are adequate to deal with this but it is not being dealt with properly. We want greater recognition of the public service role that newspapers play. We want some acknowledgement that we fulfil a public service role. Let us put it this way: we would be the poorer as a nation if there were no Irish newspapers. That is a risk which, I have to say, is real if we do not do something. I thank the Chairman. I am sorry for taking so long. I appreciate being given this opportunity.

Do any of Mr. Cullen's colleagues wish to contribute at this stage?

Mr. Frank Cullen

We will take questions.

I thank Mr. Cullen for the comprehensive presentation which raised important points. One of the great criticisms of the way the departmental system works is that there is fragmentation, that every Department operates like a silo and there is not enough integration and convergence between them. That is especially true in the media and Mr. Cullen highlighted a number of points, which need to be addressed and which I would hope may be addressed in the formation of a new Government. Certainly, when I heard Mr. Cullen was attending this committee meeting, the first question I asked was whether this was the correct committee because the Department of Communications, Energy and Natural Resources does not deal with the print media. That is a difficulty.

The second difficulty, with which I am boring everyone but which I raised a number of times on the Broadcasting Act when we were working through it in the Oireachtas is that the idea of having two regulators, the Broadcasting Authority of Ireland, BAI, and ComReg, makes no sense because what Mr. Cullen highlighted in terms of the role of the Internet as a purveyor of news and information does not directly come under the remit of the BAI but is regulated by ComReg. It is an expensive and inefficient way to regulate and Mr. Cullen has highlighted problems that should be dealt with by one regulator, not two. We need to deal with that. With a new Government, I hope it may happen.

The issue of digital copyright is important as well. Mr. Cullen made the point that everyone needs to work together on it. That seems key. Frankly, it does not progress Mr. Cullen's case far when he states that the newspapers need to meet RTE. The immediate question it raises for me is why the newspapers have not done so. What is the difficulty? RTE is doing what it does. It is working, as I understand it, within the rules of the game, within the requirements of the statutory basis on which it operates. If RTE is not doing that, then it is acting illegally or in contravention of the state aid rules and the newspapers have an obvious recourse to law. Coming to the committee and in some way making special pleading is not the most intelligent way to go, if Mr. Cullen does not mind me saying so. I believe the powerful point he makes about having an overall policy is absolutely correct, but the newspapers need to work together on this. While I do not know much about the business, if there are difficulties with individual newspapers in developing websites and being able to compete with RTE, why do the newspapers not work together to develop the Internet side of newspapers? Perhaps that is impractical but it seems an obvious point. Maybe Mr. Cullen would respond and tell me where I am wrong.

I have a difficulty with the idea of public service on which Mr. Cullen cited the example of The Irish Times. Generally speaking, newspapers in Ireland are of a good quality and we are very fortunate. I believe in the future of newspapers and I have no criticism in that regard, but I do not describe them as a public service and I do not think anyone should. In a way, that reduces what a newspaper is. There must be editorial freedom and a particular approach from an individual newspaper that should be protected. If the newspapers come under some kind of public service legislation, the first cry that will come up is that there is interference with free speech. Maybe I am wrong again, but that is certainly my concern about that.

It seems to me that working together is an important point to establish. Having a policy that is agreed in some way to ensure we have that mix in future is essential, and that is the role of Government. The idea of having one Minister responsible makes sense and we should pursue that. I certainly think we should define public service broadcasting. This was raised when we debated the legislation in the House and we got nowhere.

For many years the newspapers' property pages were bulging with advertisements and they were making a fortune. I cannot understand why they did not take all that lovely money and invest it in Internet services. That is what people want. I cannot fathom why they were not meeting the needs of the market at a time when they had all that money. It was obvious. We all can see it. We all, certainly those of my age anyway, are struggling with it. For the next generation coming up, there is no doubt about it and I would have thought that is where they, as business people, would have been investing heavily and effectively.

On criticising RTE, we all can look at the points Mr. Cullen makes. It is not that I am disregarding them in any way. It is certainly worthy of consideration but if RTE is effective, is that such a bad thing? If, for example, RTE is given the job of developing digital terrestrial television, DTT, which Mr. Cullen sees as a further threat, that will cost RTE €70 million. RTE will have to go into debt for the first time in 30 years to develop that and it does not have any choice. RTE must do so because that is a Government requirement on it. That is the other side of it.

I will finish by accepting that much of what Mr. Cullen states is valid. We need a clear policy and we need to ensure there is a mixture in the future, allowing for the fact that there has been rapid change, but we also need to ensure it is done on the basis of some kind of understanding that one cannot keep coming back to change the law, which I presume is what Mr. Cullen is looking for in terms of the developments in RTE because RTE is a mixture or curious hybrid of commercial and public service. We can have much ideological discussion about whether it is the best way to have a public service broadcaster, but that is what we have got. I do not see that the position will change significantly in the current situation. I welcome the points Mr. Cullen made, however, and I certainly would take them seriously.

I apologise for being late. I thank Mr. Cullen for the presentation and for providing it in advance. It has been great to be able to read it.

Like Deputy McManus, I was struck by the case he made regarding the separation between broadcasting and print, especially that the remit of the newspapers does not come within it. Mr. Cullen made a strong, thought-provoking case. Is that something the committee can raise because newspapers play a pivotal role in the area of communications?

Senator O'Toole mentioned before he left that Mr. Cullen kind of forces us to protect RTE. I do not feel any compulsion to protect RTE. Earlier in his presentation, Mr. Cullen spoke of RTE's responsibility not to act anti-competitively and I listened to the points he made about the different platforms RTE uses. I was not struck by it being anti-competitive. I wondered was it a case of RTE being effective as opposed to anti-competitive. If there was a question of RTE acting anti-competitively, that would be one the committee would have to think about because RTE is within its remit. The more pressing question for us is whether RTE provides public service broadcasting. Most of the time I think it does. Rather than being anti-competitive, RTE is quite effective in promoting itself and has used its own platforms to do so. Mr. Cullen showed the committee a slide relating to "The Late Late Show" but I do not understand how the station is behaving in an anti-competitive way. I will return to this matter.

There are a couple of other matters to which Mr. Cullen referred and on which I would like him to expand. The first of these relates to copyright protection for newspaper content. What form would such protection take and what is required in order for it to be provided? The second matter is the proper implementation of law in order to provide a framework for fair competition. What is not being implemented in this regard at present? Will Mr. Cullen expand further on what he considers proper implementation and indicate what needs to be addressed in this area in order that such implementation might be achieved?

These are challenging times and when one considers what has been happening to the print media across the globe, it is easy to see that the advent of the digital age has presented our guests with a unique set of challenges. I hope they can rise to meet those challenges. It is not necessarily the case that I see newspapers as playing a public service role. However, having diversity and competition within the newspaper industry has the potential to add a great deal to people's lives. It would be an awful shame if the industry were not in a position to continue.

I apologise for my late arrival and that I was not present for the beginning of Mr. Cullen's presentation. I was, however, interested in what I did hear Mr. Cullen, who has written to members in the past, say. I feel our guests' pain. I agree with a great deal of what was said regarding the fresh approach required as the entire media world changes. I also agree that having a single regulator would make absolute sense. I am of the view that we are probably heading in that direction in any event.

From a political standpoint, RTE is a commercial semi-State body with a public service remit. There is no appetite, either politically or among members of the public, for a higher licence fee, which is really what our guests are seeking. As previous speakers stated, RTE is already complaining bitterly with regard to it carrying the full cost relating to the switch to digital. Nevertheless, Mr. Cullen is correct when he states that even if RTE did not have a public service remit, it is probably abusing a dominant position in any event. If it is doing that at public expense, then our guests have a genuine case. Where they bring that case is really the problem.

There is no Minister who has responsibility for newspapers, whereas the Minister for Communications, Energy and Natural Resources is responsible for RTE. Have our guests sought to bring their case to the Competition Authority for consideration? As Mr. Cullen stated, under EU law RTE's remit should be properly defined and its commercial behaviour should be consistent with its public service remit. Is there a case to be brought to Europe in respect of this matter? I accept that I am passing the buck somewhat and that our guests may want the committee to take action. The last thing the public needs is the loss of Irish newspapers. People would be greatly saddened by the loss of any of the newspapers. Such a loss would be bad for society in general and for many other reasons which I do not need to rehearse at this stage. Have our guests considered any of the lines of attack to which I refer?

I welcome our guests and thank them for their presentation. I have been informed by some people that the problems in the newspaper industry were caused by the newspapers themselves as a result of different things that were done in the past. There are those who are wary of reading newspapers and some individuals have informed me that they are even afraid to read the death notices.

Is that in case their names are contained in them?

Yes. It is also because they could be wrong. The newspapers get so many things wrong and not all of the reporting done is factually based. One can read reports or articles, the content of which sometimes does not match one's expectation of what it was supposed to be.

On local and regional newspapers, I am from Longford and in my opinion the Longford Leader is an excellent newspaper, particularly as it provides very balanced and fair coverage. In addition, it reports good and bad news on an equal basis. The national newspapers do not seem to carry good news stories; it all appears to be bad news. The Longford News closed recently, which is very sad and which should not have happened. I have no difficulty in stating that the people who owned that newspaper should not have let it go, they should have retained it, and those who worked on it, particularly as it was in existence for almost 100 years. When times were good, huge amounts of money changed hands in respect of the purchase of different newspaper titles, the owners of which just sold out. I do not believe that newspapers are dead but they are certainly dying.

It was stated earlier that RTE is a public service broadcaster. We are all aware that the station is such a broadcaster in name only. It does not provide a public service at all. Its remit means it is supposed to provide a public service but it does not do so. I am of the view that it should be sold off and there would be no one better to buy it than our guests. The members of the National Newspapers of Ireland should get together and buy RTE. That would do everyone a big favour. I am not suggesting that one newspaper should buy the station but it would be fair if the Irish Examiner, the Irish Independent and The Irish Times came together to do so. It is unfortunate that the newspapers are in the situation in which they currently find themselves. However, I am of the view that the solution to their difficulties would be to approach the authorities at RTE and make them an offer. That would solve many problems.

Mr. Cullen referred to advertising revenues being at 1998 levels. However, from 1998, Irish newspapers were hugely profitable. In that context, how serious were they in embracing the digital age and the opportunities offered by the Internet? I saw a recent report which indicated that Google is far ahead of everyone else in this regard. The report to which I refer shows that Daft.ie is in approximately 12th or 13th position, RTE is in 14th or 15th place and The Irish Times and the Irish Independent are further down the list. Are the newspapers the creators of their own difficulties in that they did not foresee the potential of the Internet at a time when RTE identified the opportunities that exist? RTE’s website is, by common consent, very good and extremely popular. Have our guests considered whether they missed the boat to an extent? Should they invest more time and resources in improving their websites rather than complaining about RTE, which runs a particularly professional site?

It is probably not that important but I wish to declare an interest by stating that my son worked on the development of RTE's website when it was first being established. However, he is no longer involved in that regard.

I must also declare an interest. I have no involvement with RTE but my brother and a number of my nephews are journalists.

I am of the view that the newspapers missed the boat. Our guests appear to be suggesting that Mr. Rupert Murdoch should be a member of the committee in order that some form of traction might be obtained on this issue. When Mr. Cullen was speaking earlier, I went onto the Google News website and discovered that all nine of the articles relating to a particular issue which appear this morning on the websites of the newspapers represented at this meeting are available there. The issue I chose in this regard relates to the DJ in Cork and I picked it for no reason other than that it is the only story which is solely of Irish interest. All of the articles relating to the matter to which I refer and which appear in the various newspapers are available for me to read now, at no cost. That has nothing to do with RTE. No matter what we do, that is the reality. Newspaper websites are updated regularly and I realise that requires input from journalists and they have to be paid to do that. Mr. Cullen could have been more forceful about this. That should be recognised, valued, costed and paid for. That will have to happen. The Murdoch newspaper group has to charge for content but that is not the case with other newspapers. I can pay €9 a month online for 25 editions of The Irish Times, which is good value, given I do not have to buy a newspaper. Mr. Cullen should also highlight value as an issue. Another significant issue, which is raised with the committee frequently, is why a London broadsheet can be bought for €1 but one must pay almost double that for an Irish broadsheet.

RTE representatives will appear before the committee in a few weeks and they will say they are up against "The X Factor" and that ITV is charging €250,000 for a 30-second advertising slot during two broadcasts of that show next month and they have to deal with that. I am sympathetic to the issues raised by the representatives but they have not given us a solution. When I received their letter last week, I visited The Guardian website and the first thing I saw was an offer to buy five pairs of thermal socks for £25. I compare that with the Irish newspaper sites, which are a little po-faced. Similarly, I visited The Daily Telegraph website to see what that newspaper is doing and it is offering video content. It has built up what it is doing and it is selling on that basis. On The Guardian website earlier, there was an advertisement for a wind resistant umbrella for £9.99. This is a different world.

I am an old fashioned statist but I will support the private sector in any way I can. We kick the arse of RTE all the time for not being in the marketplace, not standing up and not mixing everything up and the same applies to newspapers. Every time they query why should RTE be able to do this, that and the other. In the UK, the BBC has one of the most amazing websites for everything imaginable. I am not sure about the relationship it has with newspapers. The representatives are asking us to do the impossible. I do not know how we will do this. Last weekend, I asked two 30 year old professionals where they access news and they replied that they use news.google.ie. I do not know how we can address that.

I will support what it takes to support the newspaper industry, which is important for a wide variety of reasons in a democracy. I accept, acknowledge and support the idea that our newspapers provide a public service, although not all time. The representatives would get good feedback in the Members' Bar at 11 in the morning, which would totally undermine that statement. Members usually have stronger comments to make about the latest RTE programme praising politicians.

The industry representatives are asking us to take action but they are not getting down and dirty. In the latest website awards, The Irish Times was ahead of RTE. The home page of the Irish Independent website today suggests it is moving into that space to sell products. The Irish Times provides space to sell cars, find a restaurant or hotel and so on. I am not sure how much digital advertising is being undertaken by newspapers. I am involved in two organisations which have spent large amounts on digital advertising to get ahead of the field in terms of Google searching. I do not know whether the newspapers have put that issue to one side or whether they are competing in that space. I also do not know whether that is the way forward but it is expensive to use digital advertising and Google searching.

I do not know how we can rein RTE back when everything in the House is driven towards forcing the public sector to become more competitive and to mix it with the private sector. Mr. Cullen has anticipated this with his question about whether RTE is providing a public service in this regard. We could examine which aspect of what RTE does relates to the public sector and I would be happy to engage at that level because I do not want unfair competition either. However, I am not prepared to sacrifice competition in the State sector and that has always been my view. This is not about privatisation; it is about introducing fair competition. I am prepared to engage in fair competition but I am unhappy with rowing back on initiatives.

Mr. Frank Cullen

The Senator made a number of telling points and they were well made. We have the height of respect for RTE as well and we are not asking for any damage to be done to the organisation but we are asking that its commercial side be reined in to compensate for the public service. I agree with him that we need a definition of what is a "public service" and where the crossover takes place to clarify the grey area. He mentioned the BBC, which does not have advertising on its website. If there was no advertising or limited advertising on the RTE website, we would have no argument. That is all we are asking for. Where it is commercial, there needs to be regulation and this House has always acknowledged the need for regulation.

There are regulations covering 10% of broadcast time on television and 7.5% on radio. The same principle should apply to the website. I do not say what it should be. We do not want to write the rules.

I acknowledge Mr. Cullen's point. Approximately 40% of the RTE website is funded by advertising but the organisation pays for the rest of the site through its other commercial activities. Does Mr. Cullen have a difficulty with that element?

Mr. Frank Cullen

The issue is the crossover point. I do not want to get into the solutions but there is a need for a definition of what is "public service" and what is not and of where public service begins and commercial activity begins. There is a need for transparency in the transactions between the two. At the moment it is too grey. There needs to be some compensatory factors. We are not trying to do damage here and I agree with many of the Senator's comments about how progressive is RTE. We want to avoid unfair competition. It would be easy for us to make State aid complaints and so on but we do not want to get into that either. This is a question of policy. If the Broadcasting Act 2009 was properly applied, as we understand it, we would have made serious progress. It will not address all our concerns but we would have made serious progress.

But that is like saying Newstalk cannot use webcasts. It does and nobody blocks the station. It effectively has a television station.

Mr. Frank Cullen

It is a commercial station and that is a different issue. I refer to the Google issue raised by the Deputy, which is a big issue coming down the track. The Senator said he used Google and he got all the articles out of today's Irish newspapers-----

That is unfair to newspaper owners.

Mr. Frank Cullen

The day may come when he will not be able to access them because there will not be Irish newspapers. The committee has to understand that. We are creating this content, but it is being ripped off all over the place. This is not only an Irish problem but a European one; it needs to be addressed.

Is this not why we should address it?

Mr. Frank Cullen

I agree. What I am saying is that the committee should understand the problems being faced by the content creators. The Daily Telegraph and The Guardian have enormous resources compared to some of our people. Unfortunately, we are all cash-strapped and money invested in property has gone down the drain, like many other things in this country. We are where we are, which is not a great place and we do not have great revenue. I would like to flag that. I understand there are limits to what the committee can do, but it is great that we are here and engaging on this.

Mr. Paul Cooke

Senator O'Toole mentioned Newstalk could operate as a television station. Not quite. I work with The Star newspaper, but I could not apply for a licence to operate as either a radio or television station, as I probably would not get a licence. Mention was made of crossing all the platforms. RTE can use television, the RTE Guide, teletext, the Web and satellite.

To be clear, The Star could put on a webcast, could it not?

Mr. Paul Cooke

That would be a webcast of, maybe, me.

One could stick the webcam into the journalists' office.

Mr. Frank Cullen

On that, in the United Kingdom the BBC must make TV footage available to newspapers if they want it.

That is more like what we should be talking about.

Mr. Paul Cooke

The point we are really trying to make is that RTE generates a significant portion of its news through the licence fee. It then uses this content on its digital platform. The Irish Times must use its commercial journalists to generate its news. It is true that newspapers generated a significant amount of money through property, which they have invested in websites. If I wanted to buy an ad on RTE today advertising a website, it would cost me a serious amount of money, but if I tuned in to “Morning Ireland” I might hear the presenter telling me if I want to hear more I should go to rte.ie. As has been mentioned, rte.ie has almost become the brand. I cannot do that. Where is that costed out? That is a key point.

Someone made the point that RTE is a commercial station. It is, but it is a dual funded model. The ESB is not a dual funded model. Therefore, RTE is a different semi-State from others.

Yes. We are getting closer to where action should be taken. We have the international issue, the question of what a public service is and the crossover. These are the genuine issues we need to discuss. I do not imply that what was mentioned earlier is not genuine, but we must recognise the need to deal with the issues both domestically and internationally. I completely agree that it is grossly unfair that the work of journalists from NNI who must make their own input into their websites is ripped off by the likes of Google News. When I discovered that, I started subscribing to The Irish Times online, because I felt that was only fair. I would support any attempt to protect the work of these journalists. I am sure copyright issues etc. arise in that regard, but I do not know how one would deal with that. I suspect we need some legal advice in that regard. It is an issue that should be raised on a European wide basis. We have managed to deal with many issues on the European level and changes have come about on a Europe wide basis. We should be prepared to consider working that way.

Mr. Liam Kavanagh

The Irish Times was one of the first into the arena of online newspapers and has been investing in that area since 1998. Every year since then, we have invested significantly in our online website with a view to providing news and information. Consistently since then, we have never made money from the site. It is not a profit centre for us, but costs us money. This brings home to me the difference between us and RTE. It says its online service does not cost it anything and is totally funded out of commercial activities. That does not stand up from my perspective. We have been investing in our website for many years, but we have not been able to make a profit from it. Mr. Cullen explained that newspapers are under threat. From the perspective of The Irish Times I believe there is a long future for print. However, while we must look at our print product, we must also invest in our online product.

In the day to day cut and thrust of the market as it stands, RTE dominates the market. It dominates it from two points of view. It dominates it in terms of advertising and has a significant influence on the level of advertising money that is spent in the market and how that advertising cake is shared out. Mr. Cooke point out how that is done and the various platforms RTE has give it significant strength in that area. The second aspect of its domination is the way the RTE websites are promoted. I cannot compete with that. I cannot compete with the sort of promotion that goes through RTE throughout the day for its various website offerings.

Is Mr. Kavanagh saying he cannot compete with it because of the amount of advertising of the sites?

Mr. Liam Kavanagh

If I was to have the same number of ads on RTE for The Irish Times, I would be out of business very quickly.

I am only trying to clarify the point being made. There is nothing wrong with RTE telling people that if they want to hear more of an interview, they should go to rte.ie. The problem for The Irish Times is that RTE is selling the advertising on its website. Is that the issue?

Mr. Paul Cooke

No, sorry it is not.

Mr. Liam Kavanagh

I am trying to bring traffic to our website. The way I do that is through our newspaper and the cost of that is part of our internal costing. However, RTE can actively promote pushing people to the RTE website on a daytime programme, so it will naturally get more traffic than we would.

I do not contradict that, but the reason that is a problem for The Irish Times is because RTE has advertising. If it had no advertising, that would not be a problem for the newspapers as such.

Mr. Liam Kavanagh

Exactly.

I see the point now.

Mr. Liam Kavanagh

Alternatively, from the point of view of The Irish Times we would be happy to take the content for free. If for example, a story in the The Daily Telegraph was reported in a video on RTE, I would be very happy to take RTE’s video on The Irish Times website. That would allow me to compete more with them in terms of that video product. I am open to looking at that aspect. It is not that we are looking for subsidies. We are looking for consistency in the market.

There are three issues arising from that. First there is the issue of what a public service is, second the issue of digital advertising on the RTE website and third the issue of sharing content. The issue of sharing content is very interesting, but it is not an issue we have heard much of till now. I am not aware how that works in other countries. I watched the American elections on The New York Times website on my iPhone and coverage was coming in all the time. I do not know whether The New York Times was covering it out of its own resources, but I presume the coverage was coming from the broadcasting media. That is an issue we have never discussed. We have never discussed what level of access other Irish outlets could have to RTE content.

Mr. Oliver Keenaghan

If RTE's website is a commercial website, RTE should pay for its content. If it is a public service, it is fine not to pay for it. Also, if it is to be a commercial website, it should pay for its TV promotion. It does not pay currently. Therefore, as far as we are concerned, it is unfair competition. We spend significant money on TV promotion for our products. We drive audiences to our printed and digital products, but we pay a lot of money for that.

Mr. Frank Cullen

I see it as a restriction of commercial activity to compensate for the fact that there is already public service and State aid funding. European law is consistent. We need to define "public service" and say what is included and what is not.

NNI's strongest argument is what Mr. Cullen said about the BBC website not having advertising.

Mr. Frank Cullen

There was another case recently.

Restricting the activities of RTE would not go down well with this committee.

Mr. Frank Cullen

There was another recent example in Norway where the website the public service launched had advertising, but it withdrew all future advertising in recognition of a similar complaint.

Something happened in the UK last year, whereby BBC World, I believe, had to do something to comply with regulations. While I cannot recall exactly what it was, it kind of floated off from the main BBC and was dealt with as a separate satellite of the BBC.

Mr. Frank Cullen

We would have no problem with RTE taking advertising outside of Ireland; the problem is within the State.

Deputy Mitchell referred to RTE being a semi-State company with a public service remit, with which I have no problem. When it acts commercially we feel-----

The point I was making is that it is a commercial semi-State organisation as well as having a public service remit.

Mr. Frank Cullen

Then there has to be compensation because of this €200 million.

I accept what Mr. Cullen is saying.

Mr. Frank Cullen

It is purely a balance; it is just the principle of that.

I wish to respond to Senator Corrigan; she is gone. I was not saying "The Late Late Show" is anti-competitive.

The Senator may have gone, but she will be checking the transcript of the meeting.

Mr. Frank Cullen

I was not saying it is anti-competitive, I was merely illustrating-----

The reference may have been to products of its sponsor.

Mr. Frank Cullen

I was asking whether this is right for public service. My real question was whether that is the committee's definition of public service and whether what newspapers do is any less of a public service. Let us not dwell on that as it is not the most important issue.

From our point of view it might be reducing licence fee so there is a balance to be found here. Its income reduced by €70 million last year and it had to deal with it. Its representatives appeared before the committee and people nodded and said it was tough.

They might be in again this year.

Mr. Frank Cullen

I accept that copyright is a European issue, but is one we also need to address. The music industry had a problem recently because of an Irish court case and it was instantly and rightly dealt with in the Seanad. However, it would be possible to replace the word "music" with "newspaper". We have similar issues. Fair play to whoever it was; while I might be able to guess, I will not mention him.

They are both publishers, so it is the same thing.

Mr. Frank Cullen

It is the same thing.

An interesting issue that has been raised with me is that people declare conflicts of interest in that particular debate. We thought nobody in the newspapers paid any attention to the Seanad-----

Mr. Frank Cullen

The final point I want to come back to is-----

-----except Jimmy Walsh in The Irish Times.

Mr. Frank Cullen

To finish the point on RTE, we have no issue with new digital channels and having 24-hour news and so forth. We have issues with the commercial activity of those new channels. Will more advertising time be made available, which in turn will drive down the cost of advertising? That is a future issue, but it is imminent. While we have been made aware of it only in the past ten days, there is a distinct lack of information as to what is really intended. We are expected to respond to consultants of the BAI and to the BAI itself - and will do so, but we have only until next week to do that.

We will be coming under conflicting pressure on that issue. We are being asked to let the market be as it is and let them have 20 minutes advertising an hour if they want.

Mr. Frank Cullen

In that case the licence fee should be taken away altogether and save the State some money.

I am not saying it is necessarily by RTE.

Mr. Frank Cullen

Let us compete in a commercial world or do as Deputy Kelly says and sell it off. Maybe we will make it an offer.

Base it in Longford.

That goes without saying.

Mr. Frank Cullen

I appreciate we have got a very good hearing from the committee and I thank the Chairman for inviting us.

I thank Mr. Cullen and his colleagues. Their presentation was first class and they raised and teased out issues for us. The committee will discuss where to take it from here. We should afford representatives of RTE the opportunity to come in and outline their side of the argument and we can then make a decision.

The joint committee adjourned at 11.15 a.m. until 9.45 a.m. on Wednesday, 1 December 2010.
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