JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Wednesday, 10 Jan 2007

Broadcasting Authority of Ireland Levy.

Chairman

The third session will deal with the proposed broadcasting authority of Ireland. The members have decided that the following areas would benefit from further discussion at these public hearings: how the levy to fund the BAI and its committee should be operated; the statutory duties, codes and rules imposed on commercial, community and public service broadcasters, including equal status for radio and television; and sponsorship quotas for advertisements and current affairs.

In looking at how the levy to fund the BAI should be operated, members are aware that how one controls the funding of an organisation allows one to control the independence or otherwise of that organisation. The statutory duties, codes and rules imposed on commercial, community and public service broadcasters, including equal status for radio and television, go to the heart of how we will regulate radio and television for the commercial, community and public service. The issue of sponsorship quotas for advertisements and current affairs-news affects the balance and relationship between commercial and public service broadcasters. We will deal with codes of practice relating to the commissioning of programmes but that will be in the session on RTE and TG4 on Thursday next between 10 a.m. and 11 a.m.

In our discussion on the draft ministerial broadcasting legislative proposals we will now discuss headings Nos. 36, 40, 41 and 42. Details of the people who will join the committee in the webcast are available from the econsultation.ie website. It also gives an overview of the proposals under each heading as they are discussed in the committee.

While committee members enjoy absolute privilege, the same privilege does not extend to witnesses. Therefore, the committee cannot guarantee any level of privilege to witnesses appearing before it. Under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

We are joined by Mr. William Prasifka, Competition Authority; Mr. Peter Feeney, RTE; Mr. Conor Maguire, BCI; Mr. Michael O'Keeffe, BCI; Ms Mary Curtin, RTE group of unions; Ms Michelle Coffey; Mr. Pat McKenna, the Irish Hard of Hearing Association; Mr. David Tighe, IBI; Mr. David McMunn, TV3; Mr. Dusty Rhodes, Digital Audio Productions; Ms Mary Owens; and Sean MacAonghusa.

This session will last two hours. We will spend the first 25 or 30 minutes on the levies, with Deputy Durkan leading off. We will then move on to the other issues. As the live webcast will conclude at 4 p.m., I would also like the proceedings to conclude then.

Deputy Durkan

How should the levy be calculated? Should it be combined with the licence fee and other sources in the calculation of income or revenue? It is proposed to exclude the licence fee from the levy calculation, which has implications for the future funding of television and radio services, how it should be balanced between the public and private sectors and competition between them. It would be beneficial if each stakeholder indicated its views on this important issue because it is fundamental to the future development of the broadcasting sector.

Mr. Conor Maguire

The Broadcasting Commission of Ireland supports the proposal to fund the regulator by a levy system. It is appropriate and would reflect the usual practice for the funding of regulators. Under the old system, a levy of 3% of gross income was applied. That was a blunt instrument and probably did not discriminate between the different types of broadcaster it affected. It was ipso facto to deal with the private sector.

As to the manner in which the levy is calculated, discretion should be left with the BCIS, as intended under the heads of the Bill, to increase it and the income to which it should be applied. Sensitive to the requirements of the industry, we would approach the issue mindful of the obligation to be fair and to take a proportionate approach. There is some force in the idea that the levy should be based around advertising revenue, but that is just a general approach. As far as the commission is concerned, we go back to the fundamental principle and are broadly in favour of supporting the regulator by a levy. We would advocate the way the heads of the Bill have set it out and that there should be discretion as to the manner in which the levy is raised in the BCI and as to the types of income that would be subject to the levy. These should be a matter for consideration on the basis of consultation.

Deputy Durkan

Would the level of the levy be determined proportionately?

Mr. Maguire

It would be proportionate in the sense of the larger concept. We are talking about different types of broadcasters. It would be invidious not to apply the levy across all broadcasters, but how proportionality would work would be a matter to be considered on the basis of consultation with the industry. The amount of the levy would be determined by the requirements of the size and funding of the regulatory body. The way in which it would then be spread across the industry would depend on the size and nature of the broadcasters. It would not be appropriate to go into detail as to how precisely that would work out. Having set the principle, the levy would be a matter for consultation with which we would have to deal.

Chairman

Does Mr. McMunn or Mr. Tighe have any observation to make on that issue before we return to Mr. Feeney of RTE?

Mr. McMunn

With regard to the funding of the BCI, it is obvious to TV3 that the Government already collects a large sum of money through the licence fee for broadcasting. In 2006, the Government's independent adviser, Indecon, made it clear that RTE was adequately compensated for its public service obligations and even received an excess. This was even before the most recent licence fee increase was awarded. Our view is that instead of giving RTE or any other public service broadcaster the excess, it should be used to fund the regulator. That would be the most appropriate way to fund the regulator in accordance with EU law.

Mr. David Tighe

It is a privilege to represent members of local, regional and national commercial radio stations here and I thank the committee for inviting us to attend. We understand the principle of imposing a levy to pay for the running of our industry and the regulator acknowledged this is the case across many industries of a similar nature. However, we already have the legacy of the 3% levy on turnover, which was abolished in 2001 following the direct intervention of the Taoiseach. Therefore, we were somewhat disappointed by the proposals in this section. Most of our members are at a loss to understand the reasoning behind the proposal to implement the levy again, given the abolition of the previous levy a relatively short time ago.

Our chief concern is that any levy should be properly and proportionately spread across RTE and the private sector. The levy will impact negatively on smaller companies and radio stations. There are still a number of newly licensed radio stations that have yet to get into profit and we are concerned about the implications for them.

I echo some of the comments made by Mr. McMunn for an alternative funding structure. The concept and vagueness of public service broadcasting is defined within the Bill. Mindful of the level of public service broadcasting carried out on a daily basis by our members, we believe it would be appropriate for a proportional licence fee to be used to cover the cost of funding the new regulator. We are involved in public service broadcasting on a daily basis to thousands of listeners, whether in Kerry, Dublin or Donegal, and we are proud of our public service contribution to society. We mentioned in our submission the Indecon report, to which Mr. McMunn also referred. The report stated RTE was over-funded by approximately €6 million. Even though it argued that the broadcaster did not need a licence fee increase, it got one. We propose that it is reasonable that a proportion of the fee be used to fund the new regulator.

Chairman

I read Mr. Feeney's submission with interest. Does he have a different perspective on the matter?

Mr. Feeney

Yes. RTE would be completely opposed to the funding of the Broadcasting Authority of Ireland from the television licence fund because it would lead to the withdrawal of revenue from Irish-made radio and television programming. RTE thinks it would be a retrogressive step. If the funding comes from the income of broadcasters, as has been proposed, it will need to come from the commercial revenue of RTE. At least half of the work of the new authority will relate to its contracts committee, which does not relate to RTE in any way. RTE will function with the authority on the compliance side. It would be unfair to public service broadcasting to ask RTE to fund the authority in a proportionate manner that is based on all its income.

Deputy Durkan

Does Mr. Feeney think the levy should be based on turnover or on profit, if the licence fee is excluded?

Mr. Feeney

Our preference would be for the broadcasting authority of Ireland to be funded entirely by means of direct Exchequer funding, but that is not to be the case, as I understand it. Therefore, it would be appropriate to base it on advertising revenue, rather than on profit. If the authority has to rely on profits from broadcasters to fund its operations, it might be under-funded.

Deputy Durkan

I would like to ask about the direct Exchequer funding of the development of broadcasting. What does Mr. Feeney think of the suggestion made in some quarters that the licence should be abolished and replaced with a funding system based on proportionality, turnover and perhaps the strength of the broadcaster?

Mr. Feeney

The advantage of the licence fee is that it ensures the Government will not determine the amount of funding allocated for broadcasting. If public service broadcasting relies on Exchequer grants for its funding, it will depend on the Government in a way that is not in the interests of journalism and independent broadcasting. It is as simple as that.

Deputy Durkan

That point relates to the case I made earlier. I would like to conclude by asking about the future development of the industry. The public and private broadcasting sectors which have access to advertising have public service obligations to varying degrees. How are these obligations likely to be met in the future? What will be the best means of meeting these requirements? The broadcasting Bill will place a greater responsibility on the independent sector to deliver a service in this regard that is better than the service provided ten years ago.

Mr. Maguire

I wonder whether there has been a change in what is expected. The requirement that 20% of broadcasts be devoted to news and current affairs already applies to sound broadcasters. There will not be a-----

Deputy Durkan

It is a change from the position ten years ago. It seems that it might evolve further.

Mr. Maguire

The Broadcasting Commission of Ireland is always conscious of the public service aspect of the commercial radio sector, which partly results from the obligations placed on the sector in its contracts. I do not think there has been a change in policy.

Deputy Durkan

Mr. Maguire does not envisage that there will be a change.

Mr. Maguire

I do not think it is envisaged that there will be a change from the current position. That is just an observation.

Chairman

Mr. Feeney has said RTE does not think it should have to help to fund a committee which has nothing to do with it. He was referring to the compliance and contracts committee of the proposed Broadcasting Authority of Ireland. What is the reasoning behind that submission?

Mr. Feeney

As I understand it, every commercial broadcaster receives a licence for a number of years. At the end of that period the licence can be renewed, put out to tender or it can be taken over by new organisations. As this will not occur in the case of RTE, we will not appear before the committee, nor will we make submissions to it. Given that this process will form a large part of the committee's work, is RTE expected to fund it?

Chairman

The broadcasting authority of Ireland should fund only a specific part of it.

Mr. Feeney

RTE's involvement will be limited to part of the authority's function.

Chairman

That is RTE's submission.

Mr. Feeney

If a levy is imposed on commercial income, it will fund RTE's part of that.

Chairman

Do smaller radio stations such as Spin FM and FM104 have difficulty with the amount of funding they will receive or the levy that will be imposed on them?

Mr. Tighe

As I outlined, our members are surprised that the reintroduction of a levy is being mooted considering it was abolished only a relatively short time ago. The introduction of a levy would have a major negative impact on our members who are involved daily in public service broadcasting. As more and more competition is introduced into the radio broadcasting market, the only unique point of difference for most of our members is their localness. Anyone can play a piece of music, of which there are hundreds of thousands, but our members are able to talk about O'Connell Street in Limerick or Tralee better than any national radio station will be ever be able to do. Localness and public service broadcasting will be key aspects of our plans for the future regardless of any changes in the legislation.

Chairman

The submission refers to a different funding model.

Mr. Tighe

Yes, I outlined the model at the beginning of the presentation. It is appropriate in the area of public service broadcasting that a proportion of the licence fee should be allocated to covering the cost of funding the new regulator.

Deputy Durkan

What is the Broadcasting Commission of Ireland's view of that proposal?

Chairman

We will return to that matter. Is a representative from the community radio sector present? No.

Mr. Maguire

I do not know exactly what proposition I am being asked to endorse or not to endorse.

Deputy Durkan

It is that in view of the public service element of the broadcasting undertaken by the private sector, a proportion of the licence fee should be devoted to funding the commission.

Mr. Maguire

The short answer is that we would not favour the proposal.