I move amendment No. 4:
In page 5, before section 4, to insert the following new section:
"4.—(1) The total daily times for broadcasting advertisements fixed by the Authority shall not exceed 7.5 per cent. of the total daily programme transmission time and the maximum period so fixed to be given to advertisements in any one hour shall not exceed four minutes and thirty seconds. In the case of the sound broadcasting service known as "Atlantic 252" operating on a longwave frequency and licensed under section 16 of the Principal Act the total daily time for broadcasting advertisements shall not exceed 20 per cent. of daily programme transmission time and the maximum period to be given to advertisements in any one hour shall be as determined by the Authority.
(2) In respect of each financial year beginning with the year commencing on the 1st day of January, 1991, it shall be the duty of the Authority to ensure that the total revenue derived by it from advertising, sponsorship or other forms of commercial promotion in broadcasts in any year does not exceed the amount paid to the Authority pursuant to section 8 of the Act of 1976 in the preceding financial year.
(3) In respect of the part of the year 1990 from the commencement of this Act until the 31st day of December, 1990, it shall be the duty of the Authority to ensure that the total revenue derived by it from advertising, sponsorship or other forms of commercial promotion in broadcasts does not exceed one hundred and twenty per cent. of the balance of the amount of £46.815 million remaining after deducting the amount paid to it pursuant to section 8 of the Act of 1976 in the part of that year preceding such commencement.
(4) If in respect of any financial year or in respect of the period from the commencement of this Act until the 31st day of December, 1990, the statement to be provided to the Minister under section 7 (2) shows that the actual receipts derived by the Authority from advertising, sponsorship or other forms of commercial promotion in broadcasts in that year or period exceeded the limit as calculated in accordance with subsection (2) or (3) of this section, as the case may be, the total receipts which may be derived from such sources in the subsequent financial year in accordance with the said subsection (2) shall be reduced by the amount of the excess."
Amendment No. 4 has in actual fact, four parts and I will deal with them en bloc because they all have fundamentally the same objective which is to nullify the course of action on which we have embarked. In doing so, however, I must address my own amendment No. 4 which is the heart of my proposals for creating a fairer competitive broadcasting environment.
As I explained in the course of my Second Stage speech, it is the Government's policy to strengthen the totality of Irish broadcasting through the introduction of competition and choice. Through the 1988 Act we created the arrangements by which new entrants could enter the broadcasting domain. I stressed however that their right of entry is not just determined by market conditions because we, as legislators, imposed on them a series of "public service" obligations in terms of the range and quality of programmes we expected from them as well as in the sphere of news and current affairs.
A corollary to the process of opening up the broadcasting sector is that of ensuring that a fair competitive environment exists in it. This necessitates addressing the distorting factors which give RTE an unfair competitive advantage over the competing services.
The major element which creates a distortion in the broadcasting sector is RTE's dual funding. While the purpose of RTE's State subvention is to meet their public service obligations, the effect of that subvention goes further. It enables RTE to, in effect, sell their advertising time below the real cost that would be warranted by the level of service they provide. The competing services do not have a similar subvention, notwithstanding the public service obligations imposed upon them, and at the same time must compete with the "below real cost" selling of advertising time.
I had essentially two options by which this imbalance could be addressed. I could go the road of supporting the independent sector with a subvention on the same principle that RTE are so supported. I have already outlined my reasons for not pursuing that line. I have opted instead to take the alternative approach of creating greater balance and fairness in the advertising domain.
Thus my amended section 4 proposes a statutory limit of 7.5 per cent of transmission time which RTE can devote to advertising. The rationale for this limit is that since RTE get about 50 per cent of their broadcasting income from the licence fee it is appropriate that their advertising time should be half that of the independent sector who have no such licence fee subvention.
By specifying the time limit in statute, I am taking control of this area out of the hands of the Authority as well as keeping it out of the Minister's hands and am placing it in the same position essentially as the independent sector whose advertising time limit is specified in the 1988 Act.
It will be noted that we are leaving the long wave Atlantic 252 service with their existing special arrangement of 20 per cent advertising time, firstly because that service is primarily directed at the external market and secondly I did not wish to interfere with any commercial arrangements entered into between RTE and their partner CLT in this venture. Mind you I have the distinct impression that it will be some time, if ever, before Atlantic 252 get anywhere near filling their 20 per cent advertising limit with advertisements.
Subsections (2) and (3) of this section deal with the financial cap we are placing on RTE's advertising etc., revenue. In a full financial year the cap will equal the amount paid to RTE in licence fees in the preceding year. In the period from enactment of the legislation until 31 December this year it will be 120 per cent of the payments we will be making to RTE in respect of their grant equivalent to licence fees in the same period.
As I said in my Second Stage speech, we estimate that these measures will have the effect of diverting about £6 million advertising revenue from RTE this year if the Act is operative for six months or about £5.4 million if operative for five months and about £12 million in current terms in a full year.
While RTE will, of course, have to make some adjustments to deal with this new situation, I would stress that it is not as traumatic as some people have been suggesting. Basically it will return RTE to approximately their 1988 level of income and, of course, they will still have scope to grow as the level of licence fee evasion continues to decrease. In this context, therefore, talk of large-scale lay-offs can only be seen as scare tactics.
Subsection (4) is a compensating provision to deal with a situation where RTE might through accident or otherwise find that at the end of the year they have exceeded the cap. It provides that if the audited statement which the Authority will be required to submit in respect of revenues derived from advertising, sponsorship etc., shows that revenue exceeds the prevailing ceiling in a particular year, a compensating adjustment will have to be made in the following year.
I believe these measures are the minimum necessary to achieve the desired objective of creating a fairer competitive environment for all the media, including the print media.
Much of the argument that has been put forward against these proposals has focused on the danger of significant leakage of advertising revenues to external services. Let us focus a little more closely on these arguments, bearing in mind the imperative on advertisers who want to sell in the Irish market being able to address the maximum number of people in that market.
First of all none of it will go to the BBC services because, of course, that service unlike RTE, does not carry advertising. I feel it necessary to make that rather obvious point because some of the speakers opposite did not seem to realise this if I am to judge by their contributions to the Second Stage speech.
Secondly Channel 4 and their brother service S4C which is the Welsh language service and is received in the southern part of the country instead of Channel 4 proper are minority viewing services. The satellite services — Sky, Super, Eurosport, MTV and the new BSB services — have still to make an impact in terms of viewership. This then leaves UTV, which tends to rank about third or fourth in viewership figures where it is receiveable. It must be remembered that UTV is available only to a little more than 50 per cent of households here and in the southern part of the country it tends to be HTV which is received. This limited reach, combined with the fact that advertisers would have to deal with two television organisations, diminishes the relative attractiveness of the ITV service as an alternative for getting at the Irish market.
While some may say that the spread of MMDS will expand the Irish audience for external services, that expansion will not happen overnight. My contention, therefore, is that the dangers of advertising revenue leaving the country in vast quantities are greatly exaggerated.
I want to stress that both I and the Government are committed to levelling the playing field, to use the hackneyed phrase, and are fully committed to the thrust of the proposals now before us. I have, however, always made it clear in any legislation I have brought before the House that I am amenable to constructive suggestions. The same applies in this instance. I am prepared to give reasonable consideration to amendments which might have the effect of fine-tuning these proposals but not to amendments which oppose their main thrust.
Since this legislation was published originally I have had the opportunity of meeting with officers of the Irish Congress of Trade Unions. I took that opportunity to listen to their points on the proposals for revenue and the capping of advertising contained in the Bill. They made a very reasonable case in regard to the licence fee and the capping of advertising. In response to the representations made by them, members of my party and others, the Government decided, in an effort to provide a fair environment for broadcasting services and the print media, to limit their action in relation to advertising and not to proceed with the distribution of a portion of the licence fee to the independent radio and television sector. Since that discussion took place, the Congress of Trade Unions have written to me and have made known their views in relation to the amendments I have already made to the legislation and have suggested the possible fine-tuning amendments which could be brought forward.
It is my intention to bring forward on Report Stage some minor amendments to take account of some of the points made by the Congress of Trade Unions, for example, the linking of the capping to the rate of inflation, which seems to be a reasonable proposal, and increasing the limit on minutage from four and a half minutes to five minutes. I propose bringing in these amendments to meet the point put forward by the Congress of Trade Unions and the argument put forward here by some Members in relation to the position of charitable organisations. The argument in relation to the charitable organisations has been much distorted. Much has been said during the course of the debate about the implications of my proposals in regard to the reduced advertising rate currently available to recognised charities. It is necessary to put the facts in relation to this issue in context.
I want to make it clear that the reduced rate of advertising for charities is available only on radio, and not on television, all charities are required to pay the full rate if they wish to advertise on television and the RTE Authority limit the amount of such radio advertising to seven minutes per day. It is my intention to increase the proposed minutage in section 4 so that RTE can continue to cater for charities advertising at the reduced rate. I propose to increase the minutage for charities advertising at the reduced rate. I propose to increase the minutage from four and a half minutes to five minutes and to link the capping of advertising revenue, and not the licence fee, to inflation. I believe that these two proposals, together with the other major changes made in the Bill in response to the request of the Congress of Trade Unions, will go a long way towards meeting the reasonable points made by members of my party, for example, the point made by Deputy Kitt in relation to phasing. These proposals will meet the reasonable points made by reasonable people as distinct from the sterile type debate we had before. If reasonable points are made I am prepared to listen to them. In response to the reasonable points made by the Congress of Trade Unions, members of my party and others whose judgment I respect, I intend to bring forward on Report Stage amendments which will protect the very limited concessions these charities get from RTE.