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JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Wednesday, 25 May 2005

RTE 2004 Annual Report: Presentation.

I welcome Mr. Patrick Wright, chairman of the RTE authority; Mr. Cathal Goan, director general; Mr. Conor Hayes, chief financial officer; Mr. Noel Curran, managing director — television; and Ms Bride Rosney, director of communications. I express my thanks to the members of the outgoing RTE authority, particularly its chairman, Mr. Patrick Wright, whose term of office was not the easiest.

I recall RTE's first appearance before the joint committee on 17 November 2002 when we had a robust discussion which resulted in all-party support for a €45 increase in the licence fee. We next engaged on 16 July 2003 when we reviewed the serious financial position facing RTE, with losses of €11.23 million in 2000, €70.9 million in 2001 and €56 million in 2003. As is my wont, I expressed my concerns in strong terms that a surplus was most unlikely but Mr. Hayes stood his ground and said he would deliver the promised surplus, which he did. Mr. Wright and the RTE authority, together with Mr. Hayes, senior management and the staff of RTE deserve full praise for delivering on the promise made.

On 24 February 2004 a delegation accepted an invitation to visit and tour RTE. It was most impressive. I was particularly taken by the work being done in the subtitling department. I urge the incoming RTE authority to follow on and develop this area as a matter of priority.

During the visit the delegation was presented with a copy of the revised RTE code of ethics for staff which was warmly welcomed within the context of corporate governance. It is an area that must be kept under review, something RTE will appreciate as the national public service broadcaster. I wish Mr. Wright every success in whatever he goes on to do. I hope he is as successful as he has been in leading RTE.

Before I ask Mr. Wright to make his opening remarks, I wish to draw everyone's attention to the fact that members of the committee have absolute privilege, but this same privilege does not apply to witnesses appearing before the committee. The committee cannot guarantee any level of privilege to witnesses appearing before it. Further, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the House or an official or an individual by name or in such a way as to make him or her identifiable.

Mr. Patrick Wright

I thank the Chairman for his remarks. The RTE authority and executive were pleased to accept the invitation to address the committee. The RTE delegation comprises Mr. Cathal Goan, the director general, Mr. Conor Hayes, chief financial officer, Mr. Noel Curran, managing director of television and Ms Bride Rosney, director of communications. As requested I will introduce the annual report, laid before the Houses of the Oireachtas last week, and circulate it to members of the committee. The director general will then make a brief presentation and we will respond to questions from the committee in as full and frank a way as possible.

In introducing the annual report for 2004, let me express the authority's pride in RTE's role as Ireland's public service broadcaster. The members of the authority recognise the one constant facing the organisation is that of change. The current authority finishes its term of office next week. I confidently advise the members of the committee that we leave an efficient and flexible organisation in a position to respond to changes ahead. Imminent challenges include analogue switch-off, the move to digital broadcasting and the development of new broadcasting legislation. The joint committee will make major contributions to the legislation and the RTE executive will be fully supportive of the process.

Last year was a good year for RTE and the benefit of difficult decisions implemented in recent years has been clearly demonstrated. Among the highlights of the report are the achievement of a prudent net surplus of €6.8 million. The 2003 surplus was €2.3 million and we are targeting a surplus of €9 million for 2005. There was buoyant commercial revenue with a growth of €21.5 million. In 2003 there was a decrease of €2.5 million over 2002. The net cash flow of €26 million is positive for the first time since 2000. The €18 million achieved from the sale of a surplus transmitter site in north Dublin was counterbalanced by a write-down of €8 million on plant and equipment, fixtures and fittings and by a building impairment charge of €11 million.

Following an independent review on behalf of the Minister for Communications, Marine and Natural Resources, a licence fee increase was awarded for the second year in a row from €150 to €152 per licence. This was followed by a subsequent increase of €3 in April 2005 — the fee now stands at €155. There was an additional spend of €16.5 million on home produced television programming in 2004.

The annual report proves that RTE is fully accountable for all of its public funding. This year's report builds on that of 2003 with comprehensive reporting on individual business divisions, services and programme genres. The allocation of licence fee money is transparent and RTE's use of this money has stood up to independent scrutiny. We do not engage in predatory pricing practices in the market for television advertising or in discriminatory practices in favour of the RTE Guide as alleged by competitors but not upheld. This report shows where and how the increase in revenue, and particularly, in public funding in the last several years, has been spent. I am proud to say that within RTE, there is good governance, a focus on quality output, cost effectiveness and a huge commitment from staff. RTE is enjoying the benefit of a loyal and growing audience. We have invested heavily in home-produced programming and the audiences have responded.

Mr. Cathal Goan

Gabhaim mo bhuíochas leis an Chathaoirleach agus le baill an chomhchoiste. Is ábhar sásaimh dom a bheith anseo den chéad uair mar phríomhstiúrthóir RTE. Dearbhaím libh go bhfuil sé mar rún agam leanacht ar aghaidh leis an dea-shampla atá leagtha síos ag an phríomhstiúrthóir a tháinig romham trí obair an chomhchoiste a éascú ar gach ócáid cuí.

Since the last time an RTE delegation presented to the joint committee, we have seen the publication of the charter on public service broadcasting. We welcomed the publication and adhered to its terms. However, we are anxious to see the charter enshrined in legislation and hope that will happen with the publication of the forthcoming broadcasting Bill. The RTE chairman, Mr. Wright, has identified forthcoming legislation as one of the immediate challenges facing RTE. From recent considerations, at both national and European level, it is clear that Ireland needs a consolidated broadcasting Bill.

As the authority chairman stated, he and the members of the authority finish their term of office at the end of this month. In December 2002, the then Minister of Communications, Marine and Natural Resources, Deputy Dermot Ahern, said RTE was to become a commercial State company with its own board of 12 directors. This requires a change in legislation and RTE is aware, from ongoing contact with the Department of Communications, Marine and Natural Resources, that the heads of a new broadcasting Bill are being formulated and it is proposed that this Bill will give effect to this decision.

It is RTE's understanding that the new broadcasting Bill will also provide for the establishment of a broadcasting authority of Ireland and the recent Article 17 letter from the European Commission makes it clear that independent regulation is essential. In July 2003, RTE made a submission to the committee which, inter alia, stated “RTE has proposed, on several occasions since the mid-1990s including to the forum on broadcasting 2002, that there is a need for independent monitoring of public service broadcasting and so would welcome in principle the establishment of a broadcasting authority”.

Under existing legislation the raison d’être of the Broadcasting Commission of Ireland is the promotion and regulation of commercial broadcasting. RTE, therefore, believes that there would be a clear conflict of interest if the Broadcasting Commission of Ireland were to evolve into a new broadcasting authority, charged with nurturing both public service and commercial broadcasting. It is the clear intention of the members of the forum on broadcasting that an entirely new body be established and RTE would hope that this position would be adopted. RTE considers that it is perhaps impossible for the Broadcasting Commission of Ireland to avoid conflicts of interest, given its remit under the 2001 Broadcasting Act. RTE also regrets that in drafting that legislation the opportunity was missed to comprehensively address the regulation of all broadcasting. We reiterate that position and would be happy to enter into discussions with committee members if required.

RTE strives to be fully compliant to all requirements and to follow best practice where there is no designated code or similar. For example, the RTE authority fully subscribes to the Government's code of practice for the governance of State bodies and the RTE chairman reports annually to the Minister on RTE's adherence to the terms of this code. There is also a code of business conduct for authority members, drawn up to meet the requirements of the code of practice, which takes full cognisance of On Board, the joint initiative of the chief executives of State sponsored bodies and the Institute of Public Administration.

The members of the RTE authority are designated directors under the Ethics in Public Acts and as such complete the annual statutory declaration. These completed forms are sent annually by the authority's secretary to the Standards in Public Office Commission and copies are kept on file in the office of the secretary to the authority. Authority members are also required, under the Broadcasting Authority Act 1960, to disclose to the authority any interest, the nature of such interest, which he or she has in any company or concern with which the authority proposes to make any contract or in any contract which the authority proposes to make. The register of interests arising under this requirement is kept in the office of the secretary to the authority. Over the years there have been several cases where authority members withdrew from authority meetings due to conflict of interest situations arising.

The RTE code for public declaration of interests covers all staff employed, directly, indirectly or by way of any contractual means including members of the RTE authority. Members of the RTE executive board hold designated positions under Ethics in Public Acts and complete annual statutory declarations and submit them to the chairman of the authority. These completed forms are kept on file in the office of the secretary to the authority.

RTE's code of conduct for its staff is detailed in the personnel policy and procedures manual, the fifth edition of which took into account matters raised by this joint committee in July 2003. The organisation is currently undertaking a further review and updating of this code and the onus is on the organisation to bring the requirements of the code to the attention of all staff members and on individual staff members to adhere to the requirements in full.

RTE's code of business conduct was agreed through the partnership process, adopted by the executive board and noted by the RTE authority in 2002. It is intended to steer the conduct of both the organisation and of all who work for or on behalf of RTE, both internally and externally, in all business activities.

Undoubtedly, the people of Ireland's most important measure of RTE is its output across the various divisions of television, radio, news and current affairs, publishing and the performing groups. I do not want to focus on the details that I have given in my review in the annual report but would like to focus on some key points and briefly address each of these output areas. Before I do so I would like to highlight the fact that when different divisions of RTE share a joint focus, the cliché "the sum is greater than the parts" is proven to be a truism. This practice began in 2003 with a focus on the Special Olympics and was followed in 2004 with the EU Presidency and the centenary of Bloomsday, while this year we are paying particular attention to Cork 2005, European city of culture.

Of all RTE's activities, television is the area that commands the greatest proportion of the audience and the largest expenditure, and the annual report includes a detailed breakdown of this expenditure. With a commitment to continue to provide a value-added service for the public through effective branding of its many activities under the RTE umbrella, Network 2 has been given increased attention through the commissioning of new programming and its repositioning as RTE Two. This attention will continue and increase in 2005 and we expect the audience will increasingly appreciate the complementary programming offered on RTE One and RTE Two. We have also upgraded and improved our digital transmission suite, which has facilitated enhancement of our output for hearing-impaired people, allowing the subtitling of programming of national and international events together with regular additional programmes.

Drama is the most expensive genre in terms of production and therefore has attracted a significant amount of the increased expenditure, with very good results. For example, RTE has received critical and popular acclaim for series like "Proof" and "The Clinic". Co-productions such as "Omagh", co-produced with Channel 4, have won several national and international awards including the coveted Discovery award at the Toronto Festival. Some of these critically successful drama productions have sold well internationally.

RTE's children's programmes have suffered a decline in audience share with the growth in the number of dedicated channels available. That is of concern, and several new measures are being taken to address this decline. I am optimistic that next year's annual report will have positive comments to make in this regard.

RTE television sport continues to be very strong, with excellent coverage across the GAA, soccer, including European soccer in 2004, rugby, including the triple crown campaign in 2004, and an increased focus on so-called minority sports. We have successfully negotiated contracts with the GAA, FAI and IRFU for the next three years, ensuring the best of sports programming on a free-to-air basis to the Irish people.

The four RTE radio channels, which operate in an extremely competitive marketplace, held a 42% share of all listening during 2004. While virtually all the programming output has always been home-produced, increased investment has allowed the stations to offer new alternatives. For example, RTE Radio 1 has introduced a new range of series across the board covering science, politics and local government, sports features, drama for children, travel, food, Irish language, expansion of the EU, racism in Ireland, and the arts. Meanwhile, RTE 2FM targets the under-35s and continues to present programmes to attract and appeal to this younger adult audience. It celebrated its 25th anniversary last year, and the 21st anniversary of the RTE 2FM-Jacobs song contest, the leading national radio stage for young performers and composers.

RTE Raidió na Gaeltachta delivers to Irish speakers a service broadly similar to that of RTE Radio 1, with special attention paid to traditional music, and also local news and issues of the day in the various Gaeltacht communities. Of the RTE channels, RTE Raidió na Gaeltachta rose best to the challenge of local elections counts from around the country and provided effective, sustained and informative coverage.

The classical music and arts channel, RTE Lyric FM, has broadened its music policy to increase its appeal during 2004 with a widening choice of jazz, cinema, traditional and world music, as well as the classical canon. During 2004, RTE Lyric FM brought its own radio and music-making experience to students at 41 schools around the country, and 200 outside broadcasts were organised at regional festivals, venues and arts events, from the west Cork chamber music festival to the national ploughing championships.

The question of regional coverage in general is the focus of internal discussion in RTE, and a new cross-IBD or independent business divisions working group is co-ordinating all aspects of RTE's output activities in the regions. This group will also bring forward a draft regional policy for RTE broadcasting before the end of this year.

As in the case of television, increased investment has had a significant impact on our news and current affairs output. This has included the introduction of the widely acclaimed "Prime Time Investigates" strand, increased nationwide programming and a significant increase in the ability of the division to respond quickly to breaking news, nationally and internationally, including stories as diverse as the Madrid bombings, the horror of the tsunami in south-east Asia, the death of His Holiness, Pope John Paul II and the election of Pope Benedict XVI. Equally, scheduled events of national interest were comprehensively covered, for example the Irish Presidency of the European Union, the accession of ten new EU member states, the Presidential inauguration, the citizenship referendum and local government and European elections.

RTE's publishing division has four distinct business units. The long-established RTE Guide remains Ireland’s leading family entertainment magazine. To date in 2005, the focus on a value-added strategy has continued with supplements complementary to RTE programming, including “Show me the Money”, “Sunday Game”, “Off the Rails”, “No Frontiers” and the Eurovision Song Contest — on which we might pause. Two weeks ago, the free CD and poster complementing the RTE Radio programme on the dawn chorus saw an increase in sales of the RTE Guide of more than 20%. This is another example of the strength of different IBDs working closely together for the benefit of the audience.

www.rte.ie is now Ireland’s most popular media website and its popularity is increasing rapidly. An indication of this is the page impressions it enjoys, a total of 6.8 million in the month of April 2003, rising to 9.3 million in April 2004 and a remarkable 14.2 million for last month, April 2005. RTE Aertel is the country’s leading teletext service with a user base in excess of 800,000 homes, over 90% of all homes with teletext. RTE publishing’s commercial telecoms offer SMS-IVR services to over 30 RTE television and radio programmes, generating in excess of 7.1 million SMS-IVR messages in 2004, an increase of 18% over the 2003 figure.

Reinforcing RTE's role as a major cultural force in the community and strengthening its distinctive public service ethos, the performing groups benefited from continued investment and had a busy and successful year in 2004. For example, live events in 2004 attracted new audiences with an increase of 17% on 2003 figures, while commercial income also increased significantly, by 27%. The Farmleigh proms continue to attract a particularly strong and loyal audience, and both this activity and the RTE National Symphony Orchestra attracted commercial sponsorship during 2004.

I will refer to a small number of our corporate commitments which may be of particular interest to the joint committee. In response to the publication by the former Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern, of the charter on public service broadcasting, the RTE authority published a document, RTE's Guiding Principles — Implementing the Public Service Broadcasting Charter, in November 2004. The vision articulated in this document will directly inform the development of the organisation's five-year corporate plan in 2005, charting RTE's journey forward into the digital production and distribution age. The draft plan will be presented to the new authority in the October-November period with a view to publication by the end of the year. Copies of the document will be circulated to the members of this committee. Also of particular note, and in keeping with published commitments, RTE has appointed an audience council, now in its second year of activity. A member of the RTE authority sits on the council and acts as a bridge between the authority and council. A report of each of the council's meetings is published on the RTE website. Throughout the year senior editorial management has attended all of the meetings to discuss programming priorities and listen to the views and concerns of the council. In turn, these views have informed editorial considerations.

I wish to refer to diversity because in a changing Ireland, multiculturalism is of growing importance. The audience council discussed this topic on several occasions. Other aspects of diversity that were considered included how religious and cultural groups find representation on RTE programmes and in schedules. A discussion paper on disability in the media was prepared by a member of the audience council and considered by it, in session. The council examined how diversity and equality issues are reflected and considers that the journalistic treatment of such issues is trustworthy, authoritative and professional.

I thank the Chairman and members of the committee for their attention and I look forward to answering questions.

How much cash did the authority have in the bank at the end of the financial period?

Mr. Conor Hayes

Approximately €60 million.

Mr. Wright

I was speaking about cash flow, Chairman, not cash in the bank.

What is the figure for the end of the financial period?

Mr. Wright

The figure is approximately €60 million.

Mr. Goan did not mention capital investment in his report.

Mr. Goan

I can elaborate on that issue in the course of the discussions.

That is fine. I am interested in the capital investment plans of the authority.

I welcome the report and the presentation made to the committee. I wish to compliment RTE on its coverage of issues pertaining to Northern Ireland. It is a welcome development that news broadcasts now cover the greater part of the island, in so far as is possible. I hope that as part of its development programme, the authority can extend service throughout the entire island. I visited a location within the 26 counties, the Black Valley in County Kerry, that has no service. Modern technology has advanced greatly. Indeed, a man has been put on the moon. If it is possible to put a man on the moon, it should be possible to provide radio and television signals to all parts of the island. It is possible, technologically, to do so.

I ask how the authority sees itself competing with the other services providers, particularly in television, given the broadcasting legislation that is in the pipeline. Will RTE be able to provide the quality and standard of service that is required, while remaining cost effective and efficient? How does the authority view the development of a digital broadcasting service, particularly digital television? I am interested in how the authority can contribute to its early availability. Ireland boasts about being up-to-speed on technological advances and RTE should avail of all advances as they arise and make them available to customers as early as possible.

I ask the delegation to outline the degree to which RTE sees itself in competition with local broadcasters. I also welcome comments on the envelopment of much local broadcasting into multinational corporations and how that is likely to affect RTE. For example, it is quite common to sell local radio stations, as it is to sell local newspapers. The global economy favours amalgamating local or regional services and enlarging organisations to achieve greater efficiencies. This will have an impact on the quality of service provided by the public service broadcaster in the future. Has this potential impact been evaluated?

Is the authority satisfied that an adequate degree of profitability has been arrived at, given the current or anticipated licence fees? I ask the delegation to outline to the committee the revenue that will be generated by advertising in the future, as well as revenue available from other sources.

There are a lot of questions there. If Mr. Goan wishes to share them with his colleagues, he may do so.

Mr. Goan

I will begin with a general response and then perhaps my colleagues——

I wish to inform the delegation that regarding the future broadcasting Act, it is the committee's intention to engage with the new RTE authority and management before the Bill is published. We wish to have a comprehensive discussion on the legislation, but we do not have the time to engage in that today. Furthermore, we intend to engage with the other players in the market, namely TV3, the Broadcasting Commission of Ireland and the National Union of Journalists, in order that the committee will have a clearer understanding of how best to proceed. The committee will form its own independent opinion and submit it to the Minister for Communications, Marine and Natural Resources for consideration.

It would be no harm to hear the views of the authority on the issue.

I have no difficulty with that, once we do not spend too much time on the issue. The committee welcomes the views of the delegation but we are under time constraints. The time slot allocated is not ideal but the committee agreed several months ago to invite the RTE authority on this date.

Mr. Goan

First, I acknowledge that we are here to discuss the annual report, which was only placed before the Houses of the Oireachtas a short time ago. Deputy Durkan asked a number of questions and I will endeavour to address the general issues and my colleagues can deal with some of the specifics.

As we have extended our coverage to Northern Ireland via the Sky platform since the middle of April, RTE One, RTE Two and TG4 are available on that platform for people who subscribe to Sky Television. That is an advance which took a few years to achieve. The primary difficulty that we have on this and other issues of extra-territorial activity is the question of rights for material that we do not originate ourselves. However, following much work between people in RTE, TG4 and the various rights agencies and broadcasters in the UK, we arrived at a satisfactory outcome and are broadcasting into Northern Ireland. That has extended our coverage significantly in the North.

There is a limit to the capacity to go further with analogue broadcasting in the North. However, there are significant opportunities in the area of digital broadcasting to address a number of issues around universal coverage. The truth however, in both the analogue and digital worlds, is that the last place to extend into is the most expensive. That is an unfortunate fact of life. We have approximately 98% coverage of the country and each year we try to improve reception. Some of the final mile is complex and we have been involved with community groups in trying to establish small repeater stations for the services. This has been problematic in that over the years the system has grown out of a sense of co-operation and good will. There are issues around ownership, public liability, etc., in those areas which we can only go through systematically. This is a painstaking process which we are intent on addressing.

The Deputy asked about DTT. The question is timely in that yesterday the European Union indicated it believes that 2012 should be the switch-off date for analogue television services. There is no doubt that this represents a significant challenge for us as we do not have a formal plan in place to roll out DTT in Ireland. RTE has been very active in developing a view on how this might happen most successfully and we have been involved in discussions with the Department of Communications, Marine and Natural Resources on the possibility of a trial. Our understanding of DTT technology is significantly advanced on what it was in 1999 when the issue was first mooted. As committee members know, at that stage trials of DTT in other countries failed, with significant loss of money. It is fortunate, that although we do not have a DTT platform as yet, we did not go down the road of the significant loss in investment that happened in other territories.

However, we are firmly of the view that Ireland requires a DTT platform and we have confirmed to the Department our preparedness to play a full role in that roll-out. Our estimation is that once a decision is made to have such a platform, it will take three years to roll out as fully as possible, estimating 95% coverage at that stage, with a strong caveat that the last 5% is problematic. This, probably, is not good news for the citizens of the Black Valley whose situation may have to be addressed in another way, perhaps via — this is speculation — encrypted digital satellite broadcasts. There are problems around that last mile.

Sky has got in there.

Mr. Goan

Precisely, but on satellite.

Does RTE have a view on the roll-out of DTT or should it be carried out by an independent operator, similar to what the ESB is doing with the national grid? The proposal would have to be much different from what was proposed in 2001 by the former Minister's, Deputy de Valera's, officials at the time. What is the view on that?

Mr. Goan

Our view is that the most pragmatic short-term solution is that the company which now operates the analogue broadcasting system, which is RTE's fully owned subsidiary RTENL, is the appropriate vehicle for it since most expertise on matters related to television transmission, including digital, resides in that company. That view is currently unchallenged and would be a pragmatic approach if we are intent on rolling out DTT, which I believe now requires urgent attention.

Does Mr. Goan envisage something similar to what the ESB has done in separating the network from the grid? Is that what he is advocating through the company RTENL? Would that company be separated from RTE?

Mr. Goan

That company is already separate. RTENL is a wholly owned subsidiary company, but it is regulated. It has been designated as having significant market power by ComReg. In the event of the roll-out of DTT, it is clear that in any of its engagements with third parties all its accounting would have to be separately regulated. We recognise that.

Somebody asked about competition and Mr. Curran may want to come in on that issue.

Mr. Noel Curran

The competition environment is very tough. The existing broadcaster, BBC, has access to €4 billion in funding. Sky, on its most recent results, could afford £121 million in the first quarter alone on marketing. This was not in Ireland, but it shows the scale of Sky's operation. There are also more new entrants in the Irish market such as Setanta Sport, TV3 and two new channels expected in the autumn.

Competition is tough, but while we are delivering, we must not get complacent. We increased our performance last year. We did this by showing how distinctive we are through concentrating on Irish programming. We show that people get a distinct product from RTE that they do not get elsewhere and that is the reason they should watch our programmes. We are not complacent and will accelerate that schedule. We put more investment in home production this year with 20 new series last year, seven at the beginning of this year, ten in the summer and we will have ten more in the autumn. That is unprecedented new investment from RTE.

We see the competition and know it is there and growing. We cannot be complacent. We need to focus more on the audience and we are doing that. We are doing more focused audience research to find out what the audience wants and what it does or does not like. We want to know why some programmes do not work, etc. This research is not all because we are a public service broadcaster or about maximising share. Even with programmes that are obviously not aimed to get the maximum or even a large audience, we are doing research with the audience. We have accelerated that programme significantly over the past 12 months and I think there will be a further increase in that area.

We have examined both RTE channels and have revamped RTE Two. When we launched the revamp last autumn, I said it would take 18 months before we would see any result kick in. We had a tranche of investment and new programming, some of which worked. I would be the first to say that some of the programming did not work, but some did and we have had a very good response to it. We will have more investment this autumn and again in January next year. We are putting a big emphasis on RTE Two which we will continue. We will fight competition by being distinctive, by saying to people that they get something from us that they do not get elsewhere. That is working.

Despite the competition, the last couple of years have been positive in terms of our share of the market. When I attend public service broadcasting meetings in Europe, I hear that many of the broadcast companies are declining in share because of competition. Most of that competition comes from satellite operators rather than domestic, terrestrial competition. When we go through the kind of performance figures we have had the past couple of years, those companies are taken aback by them. Again, that should not make us complacent. The competition is going to grow. We need to focus on it in the way we have and try and be distinctive and give people something they will not get elsewhere.

What was the investment in new programming over the four years since 2001? I think it was €16.5 million in the annual report.

Mr. Curran

I do not have the figures for the four years with me. Spending on indigenous programming last year was approximately €15 million.

Mr. Hayes

Prior to implementing the new systems in 2003, we would not have had the ability to define the figures exactly. The figures are now put together in a totally different way, which we explained at length at a previous session here. The increase in 2003 was €16 million and it was another €16 million in 2004. Note 1 to the accounts set out a detailed set of segment reports, first for each IBD and second for each channel. However, historically RTE did not have the systems that would have enabled us to produce that information in that format.

Does that refer to home produced programmes or joint programmes?

Mr. Hayes

It refers to home produced programmes.

Is it a combination of independent sector and in-house programmes?

Mr. Hayes

Yes. In those figures we have, for the first time, attempted to set out how we spend the licence fee money and, in particular, into explaining how we allocate that money. Take, for example, the element of spending on television programmes. Last year we spent €165 million on indigenous programmes; the amount of licence money that television received to pay for that was €111 million. Therefore, if we depended on public funding, there would be a significant shortfall.

To what period does that refer?

Mr. Hayes

I am using 2004 as a example. RTE television spent €165 million on indigenous programming in 2004. Some €111 million of that was covered by receipts from the television licence fee. RTE depends on commercial revenue to try to——

Has Mr. Hayes given the figure for the total revenue from the licence fee?

Mr. Hayes

No. The total revenue that RTE received from the licence fee in 2004 was €166 million.

Is some of the licence fee spent on radio?

Mr. Hayes

Yes.

How much of the licence fee was spent on radio in 2004?

Mr. Hayes

We tried to set out such matters simply on page 22 of our annual report. Radio received approximately 18% of the RTE's licence fee receipts in 2004.

That is approximately €21 million.

Mr. Hayes

Yes.

Do the executives and presenters in RTE radio know that the licence fee contributes some €21 million towards the running of the radio station?

Mr. Wright

They would know that if they read the annual report.

That is good.

Mr. Wright

It is important that RTE does not spend any element of licence fee money on 2FM, which offers a public service using a commercial medium. As it does not need the licence fee, RTE does not spend licence fee receipts on it. Raidió na Gaeltachta is entirely funded from the licence fee because it does not receive any commercial revenue. It cannot receive money from any other source.

What is RTE's total revenue from advertising?

Mr. Hayes

It was €144 million last year. RTE also receives other commercial revenue. Its total commercial revenue was €177 million in 2004.

What proportion would that form of the total revenue for media? I refer to radio and television in Ireland.

Mr. Hayes

I understand that 52% of the organisation's 2004 revenue came from commercial sources, with 48% coming from the licence fee. Commercial revenue was particularly buoyant in 2004. RTE's licence fee revenue increased by €9.7 million in 2004. It spent an extra €16 million on producing indigenous television programmes in that year. There was also an increase in the amount of money spent on radio programmes. When RTE increases its commercial revenue, it needs to bear in mind that its objectives are to make a prudent surplus and to be as efficient as it can. Its unique selling proposition is to try to produce more indigenous programming if it receives more funding. It is much more expensive to produce indigenous programming than it is to buy commercial acquisitions from abroad.

Does Mr. Hayes know whether RTE's share of the advertising market is growing, as a percentage of the available spend on advertising? How is the organisation faring in that regard?

Mr. Hayes

It is probably growing slightly. As Mr. Curran said, RTE's viewing performance was very strong last year. If one can get more people to be interested in one's programmes there might be a link, but there is no direct correlation. There are no complete figures for the entire island that would allow one to make such a comparison in an exact way. One would have to examine the entire market.

Mr. Curran

It grew slightly last year, but it is a much smaller proportion than the share in the UK and other western European countries. As Mr. Hayes said, it is hard to get accurate information. We believe it grew slightly. Mr. Hayes also referred to the cost of indigenous programming. One can buy successful acquired programmes for €3,000 or €4,000 per half hour, but a home-produced documentary will cost €70,000 or €80,000 per half hour and indigenous drama will cost at least €500,000 per half hour. That is the difference between the investment being made by RTE and the investment being made by television companies which largely show acquired programming.

Mr. Wright

I would like to speak about the level of profitability that the authority considers to be correct. RTE could produce a higher level of profitability if it did not make home-produced programmes. Last year, it spent an additional €16.5 million on indigenous programmes, as opposed to imported programmes. The first time the RTE delegation attended a meeting of the joint committee, its share of the viewing public was approximately 33%. Its share is now well over 38% and heading towards 39%. RTE had to spend as much as it possibly could to increase its share by 5% over that time. It is spending as much as it can on public service broadcasting and making indigenous programmes because it has a duty to do so. It has been proven that the more home programmes one makes, the greater one's share of the market will be. RTE's level of profitability is based on the amount it spends in any given year. RTE can make a profit of €20 million if it wants to, but that is not its job. The more RTE spends, the more it will produce.

The proposal to increase the licence fee was supported because RTE gave a commitment to increase its production of indigenous programming.

Ms Bride Rosney

Can I make a point about the advertising market? The 12 foreign television channels which offer opt-out facilities in order that advertisers can access the Irish market are not covered by Irish regulations. They reduce the pool of money available to the four terrestrial television channels which offer advertising.

The committee is aware of that serious problem.

Can the extent of the revenue that the 12 channels in question take from this jurisdiction be estimated?

Mr. Hayes

RTE estimates that the channels take revenue of approximately €50 million from this jurisdiction each year. When RTE was preparing its budget for 2005, it also prepared a set of indicative projections for the years between 2006 and 2009. It is trying to look forward all the time, not to predict the future accurately but to plan for it in a constructive way. It would not be right for the organisation to get into any kind of bind. RTE knows it will face a crisis with which it will not be able to deal if it does not plan for the significant capital requirements which are coming down the tracks.

I asked the delegation to give an overview of the capital expenditure it anticipates over the next four or five years. I invite Deputies Broughan, O'Donovan, Kelly, Eamon Ryan, Ferris and Perry and to ask some questions before Mr. Hayes speaks about that matter.

I welcome the RTE delegation. I commend the organisation's chairperson, director general and outgoing board for their real achievements over recent years. The representatives of RTE have been very willing to meet public representatives. This is the third time I have met some members of the delegation in the past year. The joint committee had grave concerns about some aspects of the finances of the station, which has an important public sector role and provides a significant level of employment. It is fair to say that RTE's financial position has been stabilised and now looks more cheerful, for which I commend everybody involved.

I would like to discuss the content of RTE's programmes. Has RTE made a decision about the Eurovision Song Contest?

Mr. Curran

I have not heard that question in the last few days.

Has RTE come to the end of the period during which it was trying not to win the song contest? A genuine issue in this regard was raised during some RTE programmes in recent days. Although Ireland's Eurovision representatives have represented the country very well in recent years, it has been argued that established artists should be given a better chance to participate in the competition. Those who are worried about the station's finances may consider that such artists are too successful.

Is RTE in the process of repositioning RTE Radio 1 at present? Is a fundamental shift being made in order that RTE Radio 1 becomes a national news and talk radio station along the lines of BBC Radio 4 and BBC Radio 5? Is such a change being made in the anticipation that the BCI will give a national licence to a talk radio station, such as the NewsTalk 106 station in Dublin?

Did RTE make a defensive move when it rebranded Network 2 as RTE Two? I wonder if the change was made in response to certain hyenas in the press who would like to rip RTE apart, for example, by privatising RTE Two. Did RTE move in a proactive way to emulate its colleagues in the BBC in regard to the range of services it now offers?

The annual report, on page 42, which deals with income and expenditure, suggests that the sale of the transmitter contributed significantly to the income of the station for 2004. Is it intended that there should be further sales of capital assets or was this a one-off sale?

Employment at RTE has increased. What percentage or number of station employees now work on contract? What is the difference between working on contract and working as a sub-contractor? RTE seems to employ sub-contracting companies for some of its major programmes.

I note in the introduction to the report the director general effectively attacks the idea that the Broadcasting Commission of Ireland should be the regulator. My view, which I think the delegation would support, is that the BCI has been poor at regulating the news content — talk content in particular — of local radio. Would RTE prefer the establishment of a super-regulator, such as the UK regulator, Ofcom, perhaps incorporating ComReg, while having the BCI as a separate content regulator? This a matter into which the committee will have an input over the next year or so

We recently learnt of the 18 month old income figures for RTE's superstars. Are the earnings of stars such as Pat Kenny, Gerry Ryan, Ryan Tubridy and others based, by and large, on their audience share or achievements?

In the context of a parliamentary question I asked last week, does the delegation agree that there should be a public register of interests? In his opening remarks, the director general noted that there is a register of interests for board members and other staff members. However, there should be a fully public register of interests. One of the reports from which I quoted in the Dáil was by Richard Oakley and Jan Battles of The Sunday Times. It referred to agreements which stars like Pat Kenny, Gerry Ryan and Ryan Tubridy had with commercial companies, in this case with car companies. I stated in the Dáil that Ryan Tubridy had a two-year contract from June 2003 to drive an IS200 Lexus but that earlier this year he had decided, through his agent, to terminate the contract. This was incorrect. I wish to record that Ryan Tubridy did not have such a contract and I withdraw my earlier remarks about him.

However, the general point seems to be correct. Many of the stars have major commercial contracts. For example, there was much excitement a few days ago in regard to a dog owned by one of the RTE stars, Pat Kenny, and Mr. Kenny's relationship with Bord na gCon.

Does the Deputy mean stars or presenters?

Presenters, if you like.

They are not stars.

To most of the population, they are stars or perhaps superstars.

The Deputy is also starring well today.

The question arose from a query from a member of the public. Deputies also receive all kinds of queries from throughout the country. A resident in north Kerry raised the matter of the register of interests with me because he knew of the declared interests of myself and other Deputies and Senators, but did not know those of the main RTE presenters or those involved in any other area of public debate.

The RTE staff manual, published in January 2004, states at section 2.16:

It is the clear and unalterable policy of RTE that no programme presenter — especially those who are involved in news and/or current affairs and related output — should be associated with commercial or other interests such that the audience's perception of their broadcasting role is or could be adversely affected.

The section also states that their engagement must be clearly known to the producer, director general and so on. However, a few pages further on in the manual, section 4.9, on independent contractors, broadcasters and performers, states: "Broadcasters and performers engaged by RTE as independent contractors are not staff and are not covered by this manual." To what extent is this a grey area? Is it appropriate that people involved in news and current affairs should also be involved, almost contemporaneously, in commercial arrangements, given that they also have a clear and important public service remit?

I expect RTE to do well out of the broadcasting fund. I note the new fund administrator was recently appointed. Was RTE glad to get away so easily from the BCI with regard to access rules? Many of the hard of hearing felt that the terms for RTE Two and TG4, and obviously for their rival, TV3, should have been much stricter in regard to access for the hard of hearing.

The delegation stated RTE had devoted much attention to regional broadcasting, for which I commend it. Yesterday I watched an excellent one o'clock television news report on a playground in Limerick. However, to be regional rather than national, is there still a case for a Dublin television station, given that, for example, a new city is being built in my constituency and a neighbouring constituency? Despite this development, I have not seen a single RTE report about it. Such news may seem blatantly obvious to the staff who work in the station, and I realise RTE has appointed another correspondent and that it may take a live feed from Dublin City Council. Is this issue still a case of the elephant in the room?

A major new city is being built in north and west Dublin without enough social infrastructure. This is a major scandal. I have sent out numerous press releases but the issue has never been covered. I know colleagues throughout the country have raised similar issues.

The Deputy should travel to Chile or Argentina and he would be quoted for two weeks. With regard to the staff manual, there are a number of questions on the area of conflict of interest, which is dealt with under sections 1.1, 1.2, 2.2, 2.5, 2.7, 2.13, 2.14, 2.16, 2.17 and 2.23. I understand the delegation will not discuss the contracts or work of individuals at the station. However, it might provide the committee with a general overview in that regard, as well as answering the questions posed.

Mr. Goan

As the Chairman correctly stated in his introduction, the rules RTE has in place are subject to constant review. In the context of alleged potential conflicts of interest of either staff members or contractors with RTE that have arisen in newspapers recently, I have conducted research and am happy that there are no conflicts of interest which impact on RTE's broadcasts, either from members of staff or contractors. Where I have a few marginal remaining concerns, I am addressing those at present.

I do not want to get into the specifics. The Deputy mentioned names but it would be invidious of me to talk about this in a personal sense. However, I assure the committee that on the issue of dogs or cars, there are no material conflicts of interest. Given the evidence presented to me by the people involved, I am happy that the rules are being adhered to in the context of concerns about enforcing our code of conduct. That is not to say we do not need constantly to review the situation and remind people about the issue. However, I am happy to convey to the committee that, apart from a few marginal concerns, the named individuals satisfy our codes of conduct.

The public service broadcaster is open to the same scrutiny as individual politicians. Is there a register of interests for all front line employees? How far down does the register go?

Members of both Houses of the Oireachtas are registered with the commission in Leeson Street and our interests are stated. Some of Mr. Goan's colleagues and employees have a far stronger role in public debate than we do and have recently raised important issues. It would be in the best interests of transparency within our society that the Broadcasting Authority Bill should include such a register.

Mr. Goan

In terms of staff, there is no issue to address. Contractors have legitimate outside interests and I am satisfied that both I and their divisional heads would be aware of any conflict of interests with regard to their contractual arrangements with RTE. There is no need for a register because the issue is frequently and unnecessarily whipped up.

When members were in local government it was incumbent on us to leave a meeting or state our interests.

Mr. Goan

That is entirely proper in the course of democracy. It would be a very serious breach of contract if any RTE presenter, through their work at the station, was to put forward a position which was at variance with their obligation under law to present balanced and impartial coverage.

On a related issue, to what extent are there safeguards within RTE, for example with regard to live phone-in shows? Certain people or organisations might manipulate matters in order to take a particular line. Is the authority satisfied that the role of each presenter, notwithstanding the details of their contract or what they earn, is to be devil's advocate? Considering the manipulability of certain phone-in shows, do presenters occasionally choose to take a particular line and lead the public in a certain direction?

Mr. Goan

There are a number of issues surrounding access to programmes and as a result of some recent incidents we have conducted an internal review of how people get on air. In general I am happy with the discipline of our approach in that regard.

It would be against RTE's interests as the public broadcaster to allow for agendas. However, a presenter might occasionally sense a story that is worth pursuing and invite callers to contribute to a particular issue. There is a delicate line and there are times when a presenter can be perceived as leading the posse. We must regularly review the situation and we discuss it weekly at our editorial meeting. The success of many of these programmes is that they get as close to the line as possible without crossing it. Our concern is that people occasionally do cross the line and we therefore review the situation on that basis.

Mr. Curran

The issue also applies to live television. If people feel that the line has been crossed they should have recourse to the Broadcasting Complaints Commission which advertises extensively and has been contacted by an increasing number of people. We get the issue right as often as we possibly can. However, we are not above having to answer directly to complaints if there are occasions when people feel we have got it wrong.

Have any staff been disciplined since the introduction of the fifth edition of the amended code of ethics in 2004?

Mr. Goan

It has been pointed out to a number of people that certain actions are inconsistent with their RTE contracts. As a result of that, people are required to have written clearance for outside activities. The vast majority of RTE people, particularly staff members, who are asked to engage in outside activities do so for charity or public purposes. However, they must still seek clearance and this is granted at local divisional level and a record is kept on their HR file. It is not kept centrally because that would create a freedom of information record which would be available for prurient purposes. It is kept on their personnel file so that we have track of such activities. However, we do not keep track of requests that are refused.

Mr. Curran will put the nation out of its suspense and reveal our Eurovision plans.

Mr. Curran

As I am married to our last Eurovision winner, I must be careful about what I say or I will not be going home tonight. The Eurovision is a phenomenon and gained almost 48% of the viewership last Thursday night on RTE Two. This means that almost one in every two people watched the entire show. On Saturday night, it gained between 35% and 40% of the viewership. People love it and we take it very seriously. Contrary what people say, we would like to win it because it generates a lot of interest and gets the nation more involved. I would be lying if I did not say that it is much cheaper to produce these days because of the range of countries which enter. We did it in the past and were glad to do so but it was very expensive when we did it for a series of years in a row.

"You're a Star" is a hugely popular programme which involves the entire country and gives young talent a chance to perform and gain new experiences. We would be incredibly foolish to walk away from the show. However, we must look long and hard at whether the "You're a Star" winner should perform in the Eurovision Song Contest. No decision has been made in that regard but we will be considering it in the coming weeks.

The young duo who represented Ireland this year were superb, fantastic.

Mr. Curran

I am pleased the Chairman has said so. The young man is 17 years old and the girl is 20. It is the most extraordinary media event in Europe and there is huge pressure because the entire country is watching and one is in the paper every day. The duo performed incredibly well and it was very disappointing that they did not get through.

In terms of Deputy Broughan's question, we were being proactive with regard to RTE Two. We all felt that there was too much acquired programming on the station and wanted to tackle the issue. A large part of RTE Two's audience is the most fickle and difficult and the most likely to switch off and flick around satellite channels. We needed to show that RTE Two could still be relevant and it is still extraordinarily so if one considers our sports coverage, among others areas. That is why we tackled the issue.

The branding of the channel, led by Ms Rosney, was a separate issue in terms of trying to get across an image of RTE. According to our research, many people did not realise that we own Network 2. Therefore, we wanted to market RTE and we have had much success. Yesterday I picked up the brochure for the Kilkenny comedy festival and was very pleased to see that some 60% to 70% of the Irish performers have connections with RTE comedy programmes. That would not have been the case five or six years ago. We got some aspects of that wrong but we are trying to deal with it over a period.

And the question about Radio 1.

Mr. Goan

I will respond to the other questions the Deputy raised and I will ask Conor Hayes to discuss asset utilisation in general and specifically the disposal of the transmitter site.

The Deputy asked about Radio 1. RTE Radio 1 is the most successful single radio service across the country. It is an institution of extraordinary enduring quality. It commands huge respect from the beginning of the morning to late evening in its variety of programming. Any changes we make in that will be consonant with its own internal development rather than anticipating the potential of the Broadcasting Commission of Ireland licensing a national service. Our game plan is to focus on what we do rather than try to anticipate what other people do. We believe we have the strength and depth of broadcasters to continue the tradition we have had up to now. If there is a national talk licence it will not affect the basic proposition that is Radio 1.

There have been changes over the years, which were presented as a gradual evolution. It is true that there is more talk now on Radio 1 than was the case in the days of a more mixed schedule, say, up to the development of independent broadcasting. That may develop further but it will be done within the terms of Radio 1 itself rather than anticipating another competitor.

On the question of a super regulator——

Mr. Goan, can you give us an idea of the combined average market share of RTE One and RTE Two for the years 2002 to 2004 and the corresponding figures for Radio 1 and 2FM?

Mr. Goan

I have not brought the historic figures with me but I can tell you from memory that the combined share of listening for RTE radio services has declined in the past ten years, principally because of the success of local radio, from over 50% to a combined share currently of 43% for the four RTE services. That consists of 24% for Radio 1, 17% for 2FM, 2% for Lyric FM and 1% for Raidió na Gaeltachta of national audience. That is the current make-up. I cannot give you the breakdown per annum for the previous years but I would reflect that it represents a decrease, albeit that last year the decrease was considerably decelerated from previous years in terms of loss of share, from over 50% around the year 1999.

You cannot give that figure to the committee now.

Mr. Goan

I do not have the figures with me.

Will you e-mail them to the committee in order that we can complete our record?

Mr. Goan

I would be happy to present the committee with those figures.

Do you wish to speak, Mr. Hayes?

Mr. Hayes

Page 43 sets out the figures for 2003 and 2005 to which Mr. Goan has just referred.

Mr. Goan

It does not give the historic figures but it does give the figures for 2003 and 2004.

We are interested in knowing the figures from the time RTE got the licence fee increase in 2001. Perhaps you would send that to the committee, Mr. Goan.

Mr. Goan

To clarify the record, the full licence fee increase kicked in on 1 January 2003. The most relevant figures, therefore, are those for——

We want to compare them to the other two years. You might send them to us.

Mr. Goan

I will of course.

You were about to talk about the super regulator. I will then call Deputies O'Donovan and Kelly. I am sorry for delaying members on these issues.

Mr. Goan

As I said earlier, RTE welcomed the notion of an over-arching authority to examine all broadcast content matters as far back as the mid-1990s. Our difficulty with the BCI is nothing other than its purpose was specifically to oversee the establishment of successful independent franchises, and it has done that. That is its particular business. We believe there is a fundamental difference in that our key concern is the public interest rather than the return on investment moneys.

If the Deputy is asking me where those aspects become highlighted, it is in something the Deputy mentioned, namely, the issue of access and subtitling and the quota which has been indicated for the RTE services for TG4 and TV3. That is a welcome development. RTE should move to 100% subtitling. That is in keeping with any interest in access as an unqualified public service but to excuse someone or to give them less of a target for commercial reasons on what I believe to be an issue of fundamental right highlights the difference between the BCI and RTE.

We welcome the imposition of an obligation. We had anticipated it through growing our own subtitling since 2000. Access should not be conditional on the return for the investor. That is an example of the legitimate interests of return for the investor being in conflict with an overall public interest. That would not be best handled by the BCI becoming the broadcasting authority of Ireland. Content regulation should not have regard for ownership and investor return.

We saw the subtitling section of the authority and the amount of work involved in subtitling is mind-boggling. We clarified that in Australia last September when the committee visited the Sydney Broadcasting Services, SBS, and saw the scale of subtitling in its programming, which covers 48 different cultures and languages. That was a very informative trip for the committee.

What about my question on the sale of the transmitter?

Mr. Hayes

As part of the reorganisation of RTE in 2002-03, we initially had to focus on putting out the biggest fires first, so to speak, but we then considered the type of asset utilisation strategy we should have going forward. That has a number of elements to it. We have close to 200 locations throughout the country, many of them very old, and we have carried out an extensive review of all those locations. Initially, we were trying to identify whether we had surplus sites that did not have a strategic significance and that would be better disposed of. We were also trying to establish the condition of the assets and our capital needs going forward, which is the point I was attempting to make earlier.

In that context, we identified a potentially valuable site in Beaumont but at the time we identified it there was no adequate access to that site. We spent the best part of two years trying to ensure we were able to procure access before we put it up for sale. The valuation we received at the time, without the access, was a small proportion of the actual figure we ultimately realised, which would appear to vindicate the particular strategy.

While all of that was going on we had engaged firms of consulting engineers and chartered surveyors to carry out a sweep of all the various properties, which ultimately gave rise to the building impairment charge. We have buildings over 30 years old that were constructed in an era when there was not the type of health and safety regulations that are in place now. We are carrying out a very different kind of activity in those buildings now than was the case at that time and that creates various difficulties for us.

The third aspect deals with reviews and as there is not an expertise in the general market we have had to do much of it ourselves while using some people from the United Kingdom. We had to establish the condition of every piece of our equipment, some of which would be quite old. In the case of our network, for example, some of our radio transmitters are 27, 28 and 29 years old and in some cases are operating beyond their expected useful life. That was the context to the asset utilisation.

We arrived at a broad conclusion in 2004. We disposed of the Beaumont site. We took the hit in terms of the other assets and trying to decide our position. As part of the budget for 2005 we identified all of the projects except two that we had expected to undertake over the next five years. The total amount of capital expenditure is approximately €120 million. That amount excludes money that may need to be spent on digital transmission or major building reconfiguration. It includes bringing television into a tapeless environment and removing much of the analogue equipment and the conversion to cater for the impact of high-definition which will occur at a later stage and will have even more ramifications for us.

Mr. Wright

Early in its existence the authority identified the need to strengthen the balance sheet as otherwise we would have needed to approach the Government for much more than an increase in the licence fee and worked with the executive to achieve that in recent years. One can see that balance sheet is much stronger today than it was three or four years ago. As Mr. Hayes stated, a significant amount of capital expenditure will be necessary in the near future and if we do not have a strong enough balance sheet to do that we will be in trouble. This is all part of a plan set in motion a couple of years ago that will come to fruition in the next few years.

Does that mean there will be more disposals?

Mr. Wright

Not necessarily but the executive will examine assets on a regular basis and will dispose of those that are no longer needed. We do not have a list already of five or six items for disposal.

Is a combination of items such as the sale of unnecessary assets, borrowings and surpluses examined when considering the capital requirements in the next five years?

Mr. Wright

It may not necessarily be in that order but that is certainly what will be examined in the coming years.

How have deficits been dealt with in recent years?

Mr. Hayes

The most important question is how much cash we have. Accounting can have many outcomes and the end of 2004 was the first time we had a net cash surplus. While we had cash on the balance sheet at the end of 2003, we also had many liabilities including payments to people who had been made redundant. At the end of 2004 we had €63 million in cash but we had a future redundancy requirement of approximately €34 million for people who left but are to receive redundancy payments in the coming years. That leaves a surplus of €29 million.

In setting the budget surpluses for the next number of years we factored in how much capital we must spend and how much cash we can generate in order to finance in the long term in the best way possible. We will also not undertake any capital project without first knowing how we will pay for it.

Can the authority borrow?

Mr. Hayes

We could but we do not plan to do so until the requirement of the organisation becomes clear.

I am happy to accept the answers to the questions already asked and acknowledge the work that RTE has done over the decades. I thank RTE for its involvement in regional festivals such as the Bantry Mussel Fair which was covered on the radio for many years but which unfortunately is not taking place this year. The West Cork Chamber Music Festival in Bantry, which is a remote part of the country has also received coverage.

I wish to acknowledge the work of TG4 which I watch as much as I can. I notice much of the licence fee goes to support TG4 and I welcome that. On a recent visit to a hostelry one evening instead of having Sky on the television, a programme on past all-Irelands was on and received much attention.

I wish to focus on one area and will not cover the same ground as other questions. I applaud RTE's successful negotiations with the GAA, the FAI and the IRFU. As a sports enthusiast, particularly of the GAA, I would hate to see a situation whereby Sky would cherry pick events such as the Munster hurling final and perhaps the all-Ireland finals but not cover other games. Is it now a dog eat dog world where RTE fights with the rest of Europe for coverage rights to some of these sporting occasions?

I am a lifelong member of Ból-Chumann na hÉireann and recently coverage was given to road bowling. In negotiations with the GAA on covering minority sports such as road bowling, ladies football and camogie does the GAA suggest that part of the contract involve covering minority sports?

Has RTE ever considered covering yawl rowing? The all-Ireland final will be held in Arklow this year. Last year the final was in Cork, the year before that it was in Kerry and it was held in Northern Ireland the year before that. During the most recent Olympic Games two Irish oarsmen, one from Skibbereen and the other from Limerick, proudly represented us and received attention. We are an island nation and much rowing takes place. The all-Ireland final attendance is often 3,000 or 4,000 with a majority of young people. Perhaps RTE could consider covering it as Arklow is not far from Dublin.

I am glad a three-year contract has been agreed with the sporting bodies as I would be loath to pay €10 or €20 to see a Munster hurling final or an all-Ireland final on television. Can the delegation offer the committee a guarantee that RTE can achieve longer and better deals in the future to ensure that our national sports are protected? For example, Mr. Rupert Murdoch and Sky might come in and select the biggest occasions but ignore other matches people might want to watch, such as the recent Leinster senior hurling match between Dublin and Laois. That was attended by approximately 1,000 people and was covered on RTE radio last Sunday. I fear that if a big international organisation such as Sky enters the market our national games and minority sports will suffer.

My son is involved in rowing and I would not like to see sports such as that and road bowling decline through a lack of coverage. Overall, RTE is doing a good job and I acknowledge and fully accept the answers given to the questions already asked. When politicians are bitten they either lick their wounds or bite back. Perhaps an occasional snap back is good for the public interest.

I ask the delegation to bank the question.

I welcome Mr. Wright and his colleagues and I congratulate RTE on its performance and on its home based programmes. Would RTE find it acceptable to have a ten second delay for live phone-in programmes? Innocent people can be harmed and serious lawsuits can follow. It appears that no television guests from other radio stations are invited on RTE current affairs programmes. Is this a policy of RTE? Does it cost four times as much for RTE to produce a programme as TG4?

We will take the questions of Deputies O'Donovan and Kelly. Deputy O'Donovan mentioned TG4 and in the response to his question please inform us of the steps RTE has taken to separate itself from TG4 in line with the commitment outlined in the programme for government.

Mr. Goan

As someone who had a role in TG4 I am glad to hear it has such popularity and influence. RTE supports TG4 with one hour of programming per day and also provides additional support in administrative and audit functions to ensure appropriate governance. TG4's regional output is particularly impressive. The programmes mentioned, including "All-Ireland Gold", rely on the significant archive of Gaelic games created by RTE over the years. RTE and TG4 have mutual interests and we are glad the material has such popular appeal.

Deputy Kelly asked whether a programme costs four times more on RTE than on TG4. It depends what the programme is as there are all kinds of programmes that require different levels of funding. If the question is whether it is cheaper to produce programming in Irish than in English the answer is that it is not. Programmes in Irish require the same levels of professional input as do those in English. I would hate to think that TG4 would be consigned to a second-class position because it was broadcasting outside Dublin and broadcasting in Irish. The question is if TG4 can afford the level of programming it wants. The level of funding for TG4 is insufficient for the station to achieve its aim of six hours of Irish language programming per day.

Last year the Minister indicated he was setting up a working group to look at necessary measures to achieve independence. RTE and TG4 are members of that working group and RTE will provide any advice and assistance required for that to happen. There is no date set for independence and, as I have said since 1995, from RTE's perspective independence is secondary to appropriate funding.

Mr. Curran

Deputy O'Donovan asked if it is a case of dog eat dog at this stage and across Europe the answer is that it is. We face increased competition in Ireland and we have a new Irish-based sports channel that has a substantial multinational insurance company as an investor. Competition is growing.

We appreciate the Deputy's comments regarding Gaelic games. It is vital that the GAA remains free to air. Our expenditure is a multiple of the income we take from GAA games. There is no commercial case for substantial coverage of GAA championship on terrestrial television. If someone buys the GAA and wants to make money at least some of the games will have to be moved to pay TV and that would be a huge setback for Irish sport. The GAA is a cultural as well as sporting organisation. We want to hold on to it. We are working with the GAA and our relationship is now much better than in the past. Both RTE and the GAA have said that the relationship is now as good as it has ever been and when the new contract comes up for renewal we want our relationship to be such that the GAA feels it must choose us because of the service we deliver. Our relationship is a partnership and our new contract is like a new departure and is very important. Our focus is to work with the GAA and renew the contract in two and a half years.

My questions dealt mainly with minority sports, such as rowing.

Mr. Curran

We have a new minority sports programme on RTE Two and are increasing expenditure on minority sports. I am not aware of the rowing event in Arklow to which the Deputy referred.

It is the third weekend in August. If RTE turns up I will be there.

Mr. Curran

Will the Deputy pay for a ticket?

We have fought for ladies' football and camogie to be broadcast and RTE has accommodated this. Will these minority sports suffer?

Mr. Curran

They are included in the GAA contract. We also discussed increasing non-live coverage of GAA through documentaries and programmes such as "Scór", which featured on RTE a number of weeks ago.

I am glad of the response on the issue of the GAA.

Are we micro-managing the organisation?

As I have been waiting to ask this question for two hours, I ask for the Chairman's indulgence. Would RTE share the same kind of working relationship with the IRFU and the FAI?

Mr. Curran

Yes. These relationships are very good. On the matter of inviting current affairs presenters, on Monday we had a one-hour programme "Prime Time Investigates" presented by Matt Cooper, who has no relationship with RTE beyond that programme, and who presents a prominent radio show that competes directly with one of our radio shows. We had no qualms about this and we had no complaints from the radio section, which was informed that Mr. Cooper would be presenting the show. Mr. Cooper and others have appeared regularly on RTE. When Eamon Dunphy set up his chat show, which was competing with our biggest show and could have done our show and the organisation great damage, we did not drop him from any of the Champions League coverage.

Are guests from other stations, such as independent radio stations, invited to appear on RTE shows? Does RTE have a good relationship with the independent radio sector?

Mr. Curran

Yes. Ray D'Arcy presents "You're A Star" and is presenting "Rose of Tralee", which will be the biggest show we will do in terms of audience. Matt Cooper presented "Prime Time Investigates" recently.

Is there an exclusion policy?

Mr. Curran

No, not at all.

Mr. Wright

We are not a philanthropic society. We are the public service broadcaster but we are not going to offer a platform to all and sundry. As my colleague explained, there is competition and we have to be mindful of it.

I understand that.

If someone telephones in and says something he or she should not say, should the producer be able to pause the show for ten seconds and save everyone much trouble?

Mr. Goan

This issue arose in the past year in a way that caused us to examine our procedures, the practices of other broadcasters, and how many times these intrusions and unwarranted statements occurred on the radio service. We conducted that review internally with the assistance of an outside lecturer in communications. We looked at our own services and practices, in addition to looking at the BBC and a number of local radio services and some continental European services. Our conclusion was that given the amount of reliance we place on live broadcasting, the general observance of good faith that people have in the way we do business, and our own internal checks, it would be excessive to change everything in order to legislate for the very occasional person who is minded to break public confidence when they go on the national airwaves. The short answer, therefore, is that we have considered it but we have decided that, looking at best practice everywhere else, it would be one step too far.

We have decided to review all our training procedures to ensure that all the people who take the calls are confident that callers are serious. We never put someone straight to air, they are always called back to make sure they are at the number they have given. Where, in the past, there has been a case of someone misrepresenting themselves, we make sure that person does not get back on air.

The committee appreciates that it is a difficult issue. Mr. Goan has no idea what people say about me on the radio every day of the week, and there is no control over it.

I cannot understand how anybody could say anything derogatory about the Chairman, even on RTE radio.

The Deputy has no idea what they would say.

It could never happen.

We would not allow them to, Chairman.

I was interested in what Mr. Hayes said about winning the eyeballs. I think that is the technical term for getting viewers, although I do not know if I am quoting him correctly. I suppose one needs to get behind the eyeballs to win the hearts and minds of the country, and RTE does so on occasion. That is a hugely important role that RTE provides sometimes.

It was said that the issue of regulation is one for discussion in the context of the Bill, but Mr. Goan said some interesting things which I want to tease out. He said that even if the BCI was to evolve into an authority, a conflict of interest between nurturing public service broadcasting and commercial broadcasting seems inevitable. Mr. Goan said there was a conflict of interest that cannot be resolved, but will he expand on why there is that conflict.

By implication, Mr. Goan agreed with the submissions made to the forum on public broadcasting, that the BCI has failed to regulate effectively, which is a remarkably strong criticism. He gave the example of the ethos or regulatory task of promoting commercial broadcasting, which means the BCI has not been able to attach the right of access to subtitles on foot of that. Can Mr. Goan cite any other examples where he considers the BCI has failed to regulate effectively?

RTE is now being carried on Sky satellite to the North and, I presume, Britain as well.

Mr. Goan

No.

I did not realise that the satellite broadcaster could differentiate on such a basis. That must have advertising implications, given the EU television without frontiers directive. Given the move by other public service broadcasters, such as the BBC, to provide free-to-air satellite systems, has Mr. Goan considered putting RTE One or RTE Two on such a system? I presume RTE One is much easier because there is a higher percentage of indigenous programming, so one would not run into difficulties in transmitting rights-based material elsewhere. Some 60% of programming on RTE One is home grown, so that difficulty would not arise.

Has Mr. Goan considered an alternative satellite platform for RTE? Does RTE receive revenue for being carried on Sky? Is Sky not one of RTE's big competitors? Has RTE considered facilitating an alternative satellite platform which would not be benefitting what I presume is one of RTE's competitors?

I welcome the 15% increase in the overall hours devoted to subtitled programmes in the past year. What is the current percentage of subtitled programmes in the approximately 4,000 broadcasting hours per annum? What sort of increase in such programming does Mr. Goan expect next year, given that the rise was 15% last year?

I will now call on Deputy Perry, the Vice Chairman of the committee. Mr. Goan and Mr. Wright can bank the questions.

I compliment the RTE board on a very good annual report. It would appear that the licence fee represents good value for money, given the range of services offered by the four different tiers of the RTE authority. I note that an additional 59,000 people purchased television licences during the year. Is Mr. Goan happy with the method of paying TV licences through An Post? Does RTE intend to renew that contract for collecting licence fees?

RTE has 2,169 employees. What percentage of the total costs are accounted for in salaries? How much will it cost RTE to digitalise its archival material, as proposed? RTE does a good job of promoting small companies and the voluntary sector in the economy, but can it make archival material, currently available through museums and local authorities, more widely accessible?

RTE is losing a lot of money given the big fees that people are paying to subscribe to Sky's services. Is there any possibility of RTE seeking a commercial licence? Given the growth in the retail trade, particularly the hospitality and catering sectors, is there a means of seeking an increase in the licence fee for commercial operations to provide an enhanced broadcasting service for generic sports?

Mr. Goan

A number of issues have been raised by members of the committee. I will deal with the BCI issues and the broadcasting sector, but I will ask Mr. Hayes to talk about licence fee evasion and staff costs. Between us we will also talk about archive digitisation and access to same for local authorities.

As regards Deputy Eamon Ryan's question regarding the BCI, the comments I made today were a repeat of what was said in 2003, which were on the back of various submissions made to the forum on public broadcasting in summer 2002. It was founded on a view of the legitimate promotion of independent radio whereby people get licences and can expect a return on their investment, and licences which over a period have had their terms moderated in such a way as to guarantee that there is a return on the investment. RTE does not operate under that kind of premise. We are saying that one set of rules apply there, but they do not apply to RTE.

We now have a public charter under which we are expected to deliver on our commitments. We will hold ourselves accountable to the Oireachtas and to the public in that context. I do not believe the same level of regulation or compliance is necessary in the case of BCI licences, although I am open to correction on that.

The specific point I made was about a qualitative difference of approach. RTE's view is that access for subtitling is a fundamental right which should not be qualified by the effect it has on the bottom line. We are committed to increasing subtitling. A question was asked about current percentages. The percentage for RTE One in prime time in the autumn-winter schedule was 75%. There is less use of subtitles on RTE Two and the commitment is to increase it. Much of the subtitling is originated by us; some of it comes from independent contractors who subtitle live news services while additional programming comes with subtitles as part of the package we buy. I use that example to illustrate that there are different concerns. We believe access is neutral to a commercial concern; it should not be a determining factor in the percentage of subtitles available.

I take the point about the difference between independent radio stations' remit and that of RTE as a public service broadcaster. It is similar in television, with commercial television stations operating with a more defined focus. Given that there is a conflict of interest, is it possible to have a single regulator to cover both commercial and public service broadcasters in either radio or television services?

Mr. Goan

There is a shared aim of a regulation of content, within which specific recognition must be given to the appropriate regulation of public service broadcasting that receives significant public funding. The rules that apply are different from those that apply to a commercial broadcaster. Content regulation should be just that.

How does this fit into an overall model such as that mentioned? In Britain Ofcom is a combined telecommunications and content regulator for all of the telecommunications industry except the BBC. It is not necessarily the best model but one in which we have been interested because there are issues of scale. This is a small state with a population of just over four million people and we want effective regulation, not a multiplication of regulators. We are open to suggestions as to how this might happen but at the centre there should be a recognition of RTE's specific public service broadcaster remit for which it should be held accountable.

Can that not be included in the new directions such an integrated regulator would have? Should a separate regulator govern public service broadcasting?

Mr. Goan

Within that framework, the function of regulation of public service broadcasting must be discretely recognised. I am asking if, under the current structure, evolving from BCI to BAI is the best way to achieve that aim.

Why is that? In evolving, it would be possible to include special consideration of the public service remit. Why should we not use that vehicle?

Mr. Goan

For one thing the ethos of the BCI was properly established and it is now being asked to do something else. We should start ab initio.

An amendment to section 19 of the Broadcasting Act under the Disability Bill is being discussed in the Dáil as we speak. It seeks to assist those with a hearing or sight impairment. Is the authority conscious of this provision?

Mr. Goan

There are specific regulations from the BCI that we welcome on access for the hard of hearing. It is envisaged that in the future there will be audio description. That is not possible in an analogue environment but when a digital television service is available, we will play our part in rolling it out as effectively as possible.

Will it incorporate sign language, teletext services and subtitling?

Mr. Goan

Yes. On the free to air issue, we entered a contract with Sky in 2002, with TV3 and TG4. Our services were carried on the Sky platform until April in the Republic and since then in Northern Ireland at no cost to the broadcaster. That is distinct from the way broadcasters in Britain have been carried where the costs associated with encryption, a necessary part of focusing on a specific audience, are visited on the broadcaster but that has not happened here. We are confined to the island of Ireland; our service is not available in the United Kingdom for the reasons I mentioned. We negotiate rights for programming that we do not originate on the specific understanding it is for our territory. It has been mentioned that we pay a price for the acquisition for this territory. In a similar British market the price would be a considerable multiple of what we pay. Therefore, British broadcasters would resist any attempt by us to have our service into Britain unencrypted.

Given that Sky is a competitor, could other satellite platforms provide the same service differentiated to the island of Ireland?

Mr. Goan

There are other satellite carriers but encryption is the key issue. Only two companies offer encryption, Sky and Canal Plus, which would also visit a significant charge for encryption. We determined in 2002 that it was better that our service was available on the platform in Ireland at no additional cost to us or those investing in the Sky box. That is what we have done and the contract will end in 2007.

Will other satellite providers which might offer encryption be looked at then?

Mr. Goan

Our main goal is to ensure our service is available to the population in Ireland. There are legitimate concerns about availability in the United Kingdom but that is a separate issue. For that reason, DTT has a significant role to play in achieving appropriate universal coverage for the digital age. Analogue is on the way out.

There must be an Irish regulated platform. Sky is not regulated in this territory. Our service is carried on its platform with the other services but there is no effective regulation. Even with the issue of television without frontiers being revisited, it is unlikely that the country of origin principle will be challenged to such an extent that there would be regulation in this market of Sky. There is now an appropriate alternative for us on satellite to the current proposition but DTT is an appropriate model for initiating digital coverage for Ireland.

What platform would carry DTT?

Mr. Goan

It is digital terrestrial broadcasting. This is called freeview in Britain and available to 75% of the population for a one-off investment of £50 sterling. For this they get over 30 television channels, a number of radio services and some data services.

Would RTE provide the transmission systems?

Mr. Goan

RTE proposes that we be involved in it since we now operate the national analogue transmission system.

Would RTE consider pulling away from such satellite broadcasting when it has it?

Mr. Goan

It would be wrong for me to indicate that we would pull away from any means of distribution where people are consuming RTE services. The key issue in this is being available wherever Irish people want to see different programming. That will mean satellite, broadband, DTT, cable and mobile, hand-held delivery, all of which are ways people will consume content. It is our duty to be available on all of those platforms.

In terms of value for money for the licence fee payer, will Mr. Hayes take us through the figures for the three years and the impact of the licence fee increase on RTE accounts and finances? What has it allowed RTE to do and where has there been value for money? A "Prime Time" programme was broadcast last week on value for money in various parts of the public sector. It is important that we know the value for money RTE gives.

The committee should commend and acknowledge RTE for "Prime Time Investigates" which has produced a superb stream of programmes.

Mr. Hayes

Measuring staff as we do now, RTE would have had 2,499 people on its books on 1 January 2000. On the same basis, on 31 December 2004 we had 2,169 people on the books, a net reduction of 330 people, or approximately 13.5%.

What is the percentage of turnover?

Mr. Hayes

As a percentage of turnover, staff costs in 2004 would have been approximately 37.5%. In addition to having our own staff, we spent €50 million in the independent production sector in Ireland. Those costs are inevitably people and people-related. Broadly speaking, approximately 52% is spent on people costs in the Republic of Ireland.

With 80,000 new homes built last year, there was only an increase of 59,000 television licences.

Mr. Hayes

In 2004, 1,235,000 television licences were sold, an increase on the previous year of 3.4%. The increase is in the order of 57,000. However, as the Deputy pointed out, the number of house completions is substantially ahead of this figure. We have concerns about the manner in which the licence fee is collected. RTE is not directly involved in the collection of television licence fees. That is an annual contract awarded by the Department of Communications, Marine and Natural Resources.

Of the €152 per licence, how much is the contractor paid?

Mr. Hayes

The contract for the collection of licence fees is awarded each year to An Post. RTE has no involvement in that award. The money is remitted to the Department and various reductions are made. An Post receives €12 million for the contract, the broadcasting fund, introduced some years ago, receives 5% and there are other collection costs. The net amount is then transmitted to RTE as a grant. RTE has no involvement in the collection of the fees.

The additional 80,000 housing units is a large revenue source.

Mr. Hayes

Potentially it is. If one looked at the amount of public funding going into RTE over the past five years, approximately one quarter of that increase arises solely from an increase in numbers——

We will reserve that question for the Minister for Communications, Marine and Natural Resources when he appears before the committee in a fortnight's time regarding the Department's Estimate. The RTE authority does not have any role in the collection of the licence fee.

Mr. Wright

Deputy Perry asked if we are happy with the collection method. We are not happy with it and we have said so for some time. There is something wrong when the evasion rate in the UK is 6% while the rate in Ireland is 13% to 14%.

It is an important point as we are speaking about revenue streams and value for money for €155 per licence fee. What is the figure for evasion?

Mr. Hayes

Our estimate for 2004 was 13.6%. The only cautioning note I will make is that there has been a rapid increase in the number of houses built but information on how many of those houses are occupied is not good. We believe a significant improvement can be made.

It is reasonable to expect that most new houses have television sets. If we put the quantity in millions of euro, what would the extra revenue be for the station?

Mr. Wright

One will never get the outstanding 13% but it would be a good job done if it was brought down to single figures.

How much is this in millions of euro?

Mr. Hayes

Another €12 million to €15 million.

Sky television has large subscription rates for services. Is the RTE authority looking at the commercial possibilities of archival footage on, say, matches? This would be a generic project which would appeal to many people.

Mr. Wright

We did make representations 12 months ago to the Department on this matter. It is still under consideration.

The committee has spent much time on its deliberations with An Post.

It is important because the RTE authority is missing €15 million. Mr. Goan has been before the Committee of Public Accounts on this matter.

An Post is on the rocks.

We are not going down that road today. We have spent almost three hours at the meeting. Will Mr. Hayes or Mr. Goan take us through the transparency issue? In RTE's commitment to openness and transparency, all high salaries have been declared and published. How is the monitoring by the independent body going, which was also a commitment given in 2002? I thank RTE for getting involved and sponsoring the European City of Culture in Cork.

On that point, my great colleague, Deputy Lynch, who shares a constituency with the great Chairman, raised with me the question as to why so little programming is done from Cork. Apart from John Creedon's distinguished programme, she maintains there is no other programming in our second city.

Mr. Hayes

Concerning the payments for talent, those are not salaries but payments to contractors.

How is it decided that some stars, such as Derek Mooney, are employees while others are contractors?

The Deputy should use the term "presenters" rather than naming individuals.

Yes, presenters. Is there an evolutionary process where as one becomes more famous one enters a presenters' heaven where one is really a sub-contractor?

Mr. Hayes

History plays a large part in it. These are people who have many choices and do deliver the goods. None of those people is in receipt of any charitable donations of which I am aware. They must deliver for a job and they get paid for it. They are in a commercial marketplace. It is not the case that there is no marketplace anymore if one sees the amount of money Mr. Denis O'Brien is prepared to pay Dunphy for small audience figures. He is prepared to pay him a lot of money because in the long term that will build up his business. Many of these people have significant earning capacity. The annual report is a little unusual compared with others. It is fully compliant with the Official Languages Act, being published in Irish and English. In addition to all the normal corporate governance rules with which it complies, it has a great deal of statistical information, a very extensive commentary on the charter, which one will not find in other such reports, and it is similar to the sort of publication one would get from a public company, in terms of complying with corporate governance standards. It goes well beyond what is required of us by the charter with respect to semi-State bodies. It also contains the statement of commitments.

As a set of accounts, the most unusual part of it is set out, broadly speaking, on page 66. What is referred to as the "segment analysis" can be found there. In the accounts of a normal public company, even a very large one such as Cement Roadstone Holdings, segment analysis will cover perhaps four pages. Cement Roadstone Holdings is turning over €14 billion, while we turn over €350 million, yet we have provided 13 pages of segment analysis. That goes to the heart of the commitment made in September 2002 to be as transparent as possible.

Within that analysis, we are making every possible effort to disclose information. We first set out all the assumptions as to how we spread out the licence fee, who gets it and why, and what the criteria are. We attempt to outline the performance of each part of RTE, each business division, whether it be television, radio, network, performing groups or others. Second, we have taken that a step further to indicate how each broadcasting channel works, whether it be RTE One, RTE Two, Radio 1, etc. We have looked at 50 to 60 sets of accounts from public service broadcasters all over Europe and cannot find any broadcaster anywhere in Europe publishing this level of detail of information.

This year we also introduced another element. There is much discussion about economic regulation, as there is about the transparency directive which was incorporated into Irish law last October. As part of that process, on pages 74 and 75, we have tried for the first time to categorise all our activities between the public service and non-public service elements, so we could make a clear statement of belief that we are fully compliant with all aspects of the transparency directive. We have discussed this matter with officials from the European Union and they indicate at this stage that we are heading very much in the right direction in terms of the information we are disclosing.

What about retransmission? What are the transmission costs for services provided to other broadcasters? Concerns were expressed on the matter over the past few years, and I understand the BCI was asked to act as referee. What is the current situation?

Mr. Hayes

On page 68 we set out the results of the network division. There is a turnover of €22 million in that division. It is quite small. Of that €22 million, €14 million represents charges to other sections of RTE. Those figures are disclosed by each individual service on page 79.

It is therefore not discriminatory.

Mr. Hayes

In the case of the two main broadcasters to whom we provide services, TV3 and Today FM, we have had pre-existing contracts. Particularly in the case of TV3, those contracts were set up using outside advisers. I was not working in RTE at the time but I understand that the IRTC, which was the predecessor of the BCI, chaired many of the meetings to ensure proper transparency and a fair deal for all.

The Deputy referred earlier to the network. We stated we had put it into a separate company to make it entirely separate and clearly identify its assets. It has an entirely separate management structure and is separately overseen. Its board is also quite separate. Accordingly one can see its full accounting clearly. In terms of the charges it makes, we have put together a tariff model which is now published on our website, where anyone can get whatever level of information is required. The amount of detail provided there is unusual. We have published in that model more information than we were required to give.

As I do not see any auditors' notes on the accounts, the auditors are clearly happy with them.

Mr. Wright

PricewaterhouseCoopers is the independent auditor which the Department of Communications, Marine and Natural Resources sends in to RTE to carry out a review at the end of the year. We have now instituted a process. As a result of the decision in December 2002, we put together an application for a licence increase last October. The Department appointed PwC as the independent adviser. PwC arrived and measured the RTE performance across several criteria. It delivered a report to the Cabinet and on foot of that a decision was made to award RTE a licence increase.

Are there any individuals or contractors within RTE who are still subject to a confidentiality clause? Is everything now transparent?

Mr. Wright

Everything is transparent.

Value for money.

Mr. Hayes

If one considers matters at an operating level for 2000, 2001 and 2002, forgetting about acceptance charges and so on, RTE was losing €22 million, €46 million and €22 million, respectively. That was unsustainable. The licence fee decision was made by Government in December 2002 and implemented in 2003. In that latter year we increased the spend on the indigenous content — because that is how we see our major role — by approximately €16 million, and did the same last year. Those are crude numbers but they give an idea of the situation.

Last year, the increased spend in the area mentioned was about €16 million on television and about €2 million on radio. Therefore, we are talking of a total figure of about €34 million. The amount taken in over that period as a result of the licence fee increase is €56 million. Some €20 million went towards addressing the fact that we were at an operating level which was unsustainable but some two thirds of the money went towards increasing indigenous output. That is what we are trying to demonstrate here.

Is Mr. Hayes now happy that the authority is giving value for money?

Mr. Hayes

Yes. Over those two years we have had between a 9% and 10% increase in indigenous output on television, which is the most expensive form of output we have. Our goal is to create attractive programming for Irish audiences.

Mr. Curran

Deputy Broughan asked about broadcasting from Cork. We are doing quite a lot in that area. We have had several series this year, including a "Secret Sight" series, "Househunters" and others. We are looking at another series for the summer. We would intend to increase output from Cork over the next few years, but rather than just throw money at that, we have asked the head of RTE in Cork to return with a programming and business plan in terms of where Cork should be regarding output in the next few years. He is working on that and should present a final draft to me in the coming weeks or months.

Regarding Cork as European City of Culture, we run the monthly programme and we covered the launch extensively. Unfortunately, a major concert we intended to cover in Cork fell through, not due to any fault on our part. We are waiting to see what other programmes the organisers return with. Radio has covered a number of events in Cork. We are very conscious of our regional obligations. The director general has recently set up a cross-organisational group involving news, radio and all other elements, to look at RTE's regional output and see how we can maximise its effectiveness.

Would that, for example, include the north side of Dublin?

Mr. Curran

We cannot forget Dublin, it is the bear pit in terms of television. It is the most difficult market because people are used to switching channels. We have included Dublin in the news department and have recently made programming specific to Dublin that has worked very well. We are conducting research on Dublin and how to best serve the county, while not neglecting any of our regional obligations.

With regard to the OPCOMS information on driving the digital switchover, are we taking digital television seriously enough? Does the station have any concerns about the current line-up of providers, including NTL, Chorus and Sky? There seems to be a connection between the three companies.

We have spent a long time on this matter and have only touched on the corporate results for 2004 as well as some other issues. We must discuss the broadcasting element and the Act at some stage in the future with the new authority and the new management.

I thank Mr. Wright, Mr. Goan, Mr. Curran, Mr. Hayes and Ms Rosney for attending today and for explaining the role of RTE and the future plans for the authority. We look forward to engaging with them again in a meaningful manner in the near future.

The joint committee adjourned at 12.55 p.m. sine die.

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