Deputy Leyden has been given permission to raise the subject matter of Question No. 348 on yesterday's Order Paper.
Adjournment Debate. - Take-Over Bid by RTE Relays.
I thank you, Sir, for having given me an opportunity to discuss the subject matter of Question No. 348 on yesterday's Order Paper referring to the proposed take-over of Dublin Cablesystems Limited by RTE Relays. I sought an opportunity to discuss this matter in more detail because of the reply I received yesterday from the Minister. In general the reply refers to the take-over. But it is only right that we place the reply on the record of the House. The question I put to the Minister read:
To ask the Minister for Communications if he has approved a proposal by RTE Relays to take over an existing relay firm in Dublin; the cost of the takeover bid; and the method of providing finance for the proposal.
The reply I received read:
RTE have conducted negotiations for the purchase of a majority interest in Dublin Cablesystems Ltd. subject to my approval for the transfer of licences involved and to the sanction of the Minister for Industry, Trade, Commerce and Tourism under the Mergers, Take-overs and Monopolies (Control) Act, 1978. My approval has been sought and I am considering the position.
As the proposed transaction is a commercial one, it would be inappropriate to give details of the financial arrangements; however, RTE propose to finance the transaction without recourse to broadcasting funds or borrowing.
The questions I wish to pose to the Minister of State and the present Government are as follows: first of all, how will RTE Relays finance the take-over of Dublin Cablesystems Limited because the Minister's reply said that RTE Relays will not have any recourse to broadcasting funds or borrowing. It is a mystery to me to know how RTE Relays could effect a take-over of Dublin Cablesystems Limited without relying either on broadcasting funds or borrowing. I wish to ascertain exactly how it is proposed to finance the take-over of Dublin Cablesystems Limited.
I also want to know the number of subscribers. I understand that Dublin Cablesystems Limited have 80,000 to 90,000 subscribers located in the Tallaght, Rathfarnham, Ballyfermot, Coolock, Artane and city centre areas. I want to know also if the needs of the consumers have been fully considered by the Department in relation to this application. My information leads me to believe that those subscribers are being provided with a good, reliable, independent relay service at present and that it costs each subscriber in the region of £53 per annum. Of course the danger of a monopoly at any time, in any location, is that the consumer is not protected; they have no alternative. When RTE Relays take over Dublin Cablesystems Limited it will mean that in the region of 170,000 consumers in the greater Dublin area will be accommodated by RTE Relays. I am not contending that we on this side of the House are in any sense opposing the take-over. What we seek is clarification of the implications for both companies. Any major decision, affecting so many people, dictates that it is only right and proper that enabling legislation should be brought before the Dáil, or at least that this House be given the courtesy of debating a major take-over of this proportion. Indeed, Deputies affected by the take-over should be afforded an opportunity of expressing their views in relation to such a major proposal.
I believe that the subscribers and employees are pawns in a game of monopoly affecting large business dealings and that their interests are not really being taken into consideration at all. I want to ascertain from the Minister if RTE Relays have had consultations with the unions representing the 80 workers at present employed by Dublin Cablesystems Limited, if those employees are satisfied with the proposal that they be taken over by RTE Relays.
I should like to ascertain also the position regarding the involvement of Allied Irish Banks — in short the Allied Combined Trust Act — who I believe hold a 25 per cent share at present in Dublin Cablesystems Limited. I should like to know the position also regarding the Rogers Corporation of Canada who are also shareholders in Dublin Cablesystems Limited.
Those are legitimate questions in order to clarify the take-over proposal, indeed to clarify the position regarding the cost of RTE Relays and to the State broadcasting corporation in relation to this proposal. The Minister might also indicate whether the subscribers will be landed with any extra cost in respect of connections to the new, larger company, as yet unnamed, for the management and running of Dublin Cablesystems Limited and cabling in the greater Dublin area. An amalgamation of this type also involves certain opportunities for the expansion of cablesystems within the greater Dublin area and affords opportunities for special services to consumers which could be brought about with the advent of satellite broadcasting. Those are realistic future proposals and will enable consumers, taking advantage of the cablesystems, to have an excellent service.
This is a fairly complicated deal which will have far-reaching implications for the people involved. The proposal is subject to the sanction of the Minister for Industry, Trade, Commerce and Tourism under the Mergers, Take-overs and Monopolies (Control) Act, 1978. It must also have the approval of the Minister for Communications in regard to the licences already issued to Dublin Cablesystems Limited.
I might seek clarification also regarding the cost to the State, the cost to the consumer, the future of the 80 people employed by Dublin Cablesystems Limited, the future of the employees already working for RTE Relays. I want to be certain that their future will be assured in this take-over and that, before the amalgamation is completed, we will have an opportunity here, however short, of discussing its details. As Minister for Communications, the Minister has direct responsibility for policy within RTE and in relation to RTE Relays. Of course competition is healthy in any business and, naturally, monopolies tend to cost consumers more in the long run. Under this proposal the position of the employees must be protected particularly when there are so many people unemployed. We must ensure also that the services will be guaranteed, maintained and that the cost to the consumer will not be increased.
I hope the Minister can give the House those assurances to satisfy the needs of the 80,000 people who will be involved in this merger proposal.
The number of people involved in Dublin Cablesystems is 102,000 and the number in RTE Relays is 95,000, a total of almost 200,000 in all.
As was indicated in the reply to the parliamentary question by Deputy Leyden on this matter, RTE have conducted negotiations for the purchase of the majority Canadian interest in Dublin Cablesystems Ltd. The conclusion of an agreement between RTE and those Canadian interests is subject to the approval of the Minister for Communications for the transfer of cable television licences and is also subject to the sanction of the Minister for Industry, Trade, Commerce and Tourism under the Mergers, Take-overs and Monopolies (Control) Act, 1978. The approvals have been sought by RTE and the position is now being considered.
Many of the points raised by Deputy Leyden are matters which are relevant to consideration of the proposed deal. However, as I have indicated, questions relating to monopoly are also the concern of the Minister for Industry, Trade, Commerce and Tourism.
I do not intend to deal here in detail with financial aspects of the agreement reached by RTE with the Canadian majority owners of Dublin Cablesystems Ltd. That agreement is a commercial one between the parties and, because it requires ministerial approval, it is not yet finalised. It would not be proper for me to disclose matters which are confidential to the parties and which might damage their commercial interests if disclosed. I accept, of course, the point raised by the Deputy that financial matters affecting RTE are within the proper concern of this House, but RTE are not the only party in this transaction and I must have regard to the rights and interests of the other parties involved. I can say, however, as far as the funding is concerned, that if RTE Relays and Dublin Cablesystems are merged, RTE would propose to sell a minority share — up to 25 per cent of the company — to private interests. The purchase of the company would be partly funded by this sale and also partly from RTE Relays' own cash flow.
RTE have informed me of the proposed financial arrangements for the take-over and they have stated that they would not involve recourse to broadcasting funds or to borrowing. The take-over would result in a rearrangement of shareholdings with minority partners. I am informed that RTE are at present in course of negotiation on these matters and, other than what I have just given I am not in a position to go any further for the reasons outlined. I think that explains why it will not be necessary to have recourse to any extra cash.
Deputy Leyden brought up the question of the unions and implicit in that is the danger that the take-over proposed by RTE might result in job losses. If that is the case I think it would be regrettable. There must be concern in present circumstances at any developments which cause the loss of jobs. I should mention in this context that one of the criteria which is considered by the Minister for Industry, Trade, Commerce and Tourism in relation to any proposed merger or take-over is its employment effects. This aspect will have to be examined. Discussions with the unions are entirely a matter for the companies concerned and they do not fall to the responsibility of the Minister in that respect.
There are, of course, a number of general policy questions, some raised by the Deputy, which have to be considered in relation to the proposed take-over. These will be considered from the point of view of broadcasting policy and of radio regulation generally, taking into account also the potential for development of cable systems and services.
A number of the questions which arise in relation to broadcasting policy were addressed by the Broadcasting Review Committee who reported in 1974. Prior to that report only RTE had been licensed to provide cable television services. The committee in their report considered a number of approaches to the regulation of cable television services. It was the committee's view that a private monopoly of cable systems would be undesirable. They thought that arguments could be made for cable television being a public monopoly; among these arguments would be that the potential of cable, especially in the long term, would be fully developed in the public interest, that foreign monopoly ownership would be precluded, that profits from cable would be used to provide increased resources for RTE and that a service so closely related to television programming should be under public ownership and control. The committee thought that a major objection to the establishment of a public monopoly would be that political pressure would require cable systems to be provided in uneconomic circumstances, the capital needed would have to be provided by the State and a competitive situation would produce greater economy and efficiency.
The committee concluded that the development of cable could probably best be left at that stage to commercial enterprises subject to protection of the public interest. RTE could continue in the cable television business on the basis that they had no special advantages or disadvantages as compared with other operators, that the financial and accounting arrangements were kept distinct, and that they were satisfied that cable was a profitable commercial enterprise. The committee also considered that special attention should be given to securing standardisation in the business to enable inter-connection possibilities and the maximisation of the range and quality of services in the future.
RTE's involvement in cable television services has been a satisfactory one since the Broadcasting Review Committee reported. RTE Relays have been run as a profitable commercial enterprise and they have not used State or broadcasting funds for their capital development. The conditions which the committee set out for RTE in 1974 have been fulfilled and there is no evidence that RTE Relays' special position as part of RTE itself has been abused.
There have, of course, been developments since 1974. It is now evident that there will be a greater choice of services available for relay on cable systems in the foreseeable future. Satellite television services will be available and interactive information services are a distinct possibility. Arising out of this a committee were established in December 1983 to consider a national strategy for the development of cable systems. That committee are advancing their work at present and they hope to report before the end of the year. One of the questions which will have to be considered is whether the proposed take-over would either help or hinder the implementation of any recommendations of this committee for the development of cable.
RTE have put forward a number of arguments in support of the proposed take-over. They see the amalgamation of cable systems in Dublin as facilitating rationalisation and upgrading to provide for these additional services in the future. They point out that the take-over will mean the return to Irish ownership of a valuable public asset. RTE also believe that the take-over will help to reduce RTE's dependence on the television licence fee and on advertising to fund their activities.
As I mentioned earlier, the question of monopoly in the supply of cable television services is not solely related to my responsibilities but is also the concern of the Minister for Industry, Trade, Commerce and Tourism. It is, of course, the position that each cable operator has a monopoly within his own franchise area and cable subscribers have no choice of service provider. The element of competition only arises at the time cable operators apply for a licence. This is advertised publicly, tenders are invited and there is a distinct element of competition. Companies may compete for licences in more than one area, but franchises for new areas are almost invariably awarded on the basis of open competitions. The main considerations in determining the successful applicants are those of technical competence, financial standing and likely service quality. These would also be the normal criteria for considering whether to agree to the transfer of a cable licence from one company to another.
An aspect of cable television licences which impinges directly on subscribers is the charge for service raised by the cable operator. All cable television charges are subject to the approval of the Minister for Communications and in the case of the larger television companies, such as are the subject of the question, in Dublin and in Cork applications for charge increases are subject to detailed scrutiny by the National Prices Commission. The impact of any proposed take-over of a cable company on the charges to subscribers is therefore also an aspect for consideration.
RTE's request for approval of the proposed take-over is being examined in the light of the various considerations I have outlined. Because of the private nature of the companies involved I cannot go as far as Deputy Leyden would like, but I can assure him that due attention will be given to the points which he has raised on the matter.
The Dáil adjourned at 5.20 p.m. until 2.30 p.m. on Wednesday, 2 May 1984.