Go raibh maith agat. Tá mé buíoch den Chathaoirleach agus de chomhaltaí an chomhchoiste as an deis seo a thabhairt dúinn arís teacht i láthair chun cúrsaí craolacháin a phlé agus chun díriú go háirithe ar dhul chun cinn RTE ag an tráth chorrach seo in imeachtaí náisiúnta agus idirnáisiúnta. Is maith a thuigim ról agus tábhacht obair na gcoistí Oireachtais seo i bhforbairt reachtaíochta stuama agus i gcraobhscaoileadh tuisceana aibí ar cheisteanna casta a bhaineann le leas an phobail. Tá súil agam go mbeidh an cur i láthair seo ina chuidiú.
I thank the Chairman and members of the committee for the invitation to speak to them again. I appreciate the understanding and co-operation in re-arranging this meeting when we were unable to meet at the first scheduled time. RTE's annual report for 2008 is, I understand, awaiting Government approval, so there are some detailed aspects of RTE performance during that year which I will not go into, but in general I welcome this opportunity to set out and put on the record some facts relating to how the current global economic downturn is affecting RTE in the conduct of its business.
This is also, I hope, a welcome opportunity to correct some very significant misunderstandings which have arisen in the recent weeks in the public arena with regard to RTE's finances. For instance, there is absolutely no truth in the story which has featured in recent press coverage of RTE that it faces bankruptcy and-or a deficit of €100 million.
There is no denying, as we have publicly stated, that we are in a very difficult place, but it is not the crisis portrayed in other media. It would be a crisis if we had not identified the scale of the challenge we all face because of the national and international recession and if we had not clearly signalled the proactive ways in which we intend to deal with it. I will go into further detail about just that presently, but I would like first to set all of these current events within a context and a broader appreciation of the role of RTE and our discharge of our responsibilities.
As the Chairman knows, over the years there have been frequent debates in Ireland around the optimum model for the maintenance of healthy public service broadcasting in a pluralist media environment. This committee contributed greatly to that debate in its deliberations over the Broadcasting Bill which is currently on Report Stage and which, when enacted, will represent the most significant overhaul in broadcasting legislation for many years.
Prior to the current debate occasioned by the formulation and passage of this Bill, some seven years ago the Government established a forum on broadcasting which consulted widely, received submissions and held public sessions about developments in and the desired future for Irish broadcasting.
In August of that year the forum reported to the then Minister for Communications, Marine and Natural Resources with 44 recommendations, which addressed a range of issues from public service broadcasting, to digital television, regulation for all broadcasters licensed in Ireland, a broadcasting charter for RTE, the dual funding model for public service broadcasting, independent production, Irish language broadcasting, the place of RTE's performing groups within public service broadcasting and so forth.
To a greater or lesser extent those recommendations have been mirrored or reflected in the current legislation. The overriding significance of the forum on broadcasting in 2002 remains the fact it did something that is done all too seldom. The forum was that rare thing, namely, an open debate on a question of value. The question was what kind of broadcasting we need to serve our community, and there was a related and inescapable question, that is, how to pay for that broadcasting.
As result of the forum's recommendations, the Government announced at the end of 2002 a significant licence fee increase, the greatest proportion of which was to be awarded to RTE, with a number of conditions attaching and subject to annual review. In return, RTE committed to additional and enhanced television, radio and news content, a new accountability regime, a commitment to change management and improved financial management.
Subsequently, the Department of Communications, Energy and Natural Resources conducted four independent reviews over six years, using external consultants, to assess RTE's performance with regard to achieving its budget targets, fulfilment of programming and corporate commitments and the implementation of change management initiatives. In all four cases RTE's performance was such as to lead to the approval of further licence fee increases, albeit at a much lower level and well below the consumer price index.
In setting this arrangement in place the Government had sought to recognise that, in Ireland, a balance between public and commercial funding was the best approach to funding public service broadcasting and this was best achieved by regular review of the licence fee level in the context of RTE's delivery on its public service commitments. It also recognised that this review should be independent of the immediate political process. This remains the philosophy for RTE funding envisaged in the new broadcasting legislation in order to buttress independent and strong public service broadcasting.
In the years since 2003, RTE has delivered on the commitments entered into in 2002 and this has been independently verified four times. As well as enjoying increased public funding, RTE saw a significant rise in its income from commercial activities, particularly in television and radio advertising revenue. As had been signalled from 2002, this additional income has been channelled into increased content creation, both within RTE and in the independent production centre. As members will recall from RTE's last presentation to this committee, production spend in the independent sector increased from €32 million in 2002 to €77 million in 2007. Independent and in-house production have seen a total rise of over 20% on our screens. They have meant more investigative current affairs, more reporting on international affairs with an Irish news perspective, more quality original Irish drama, more children's programming originated in Ireland and more wide ranging and ambitious factual and arts programming.
In tandem, radio programming grew in its depth and variety, as also committed to in 2002. Each year since then, RTE has published a statement of content commitments across all its areas of activity, including radio, television, news and current affairs and performing groups. In almost all cases it has met those commitments, whether it be in the areas I have already mentioned or new writing and drama for radio, new commissions for Irish composers, touring with the two RTE orchestras across the length and breadth of the country or support for TG4. This increase in activity is not only a function of the welcome increases in television licence fee revenues but is also very much a product of the expanding economy and very buoyant advertising revenue. One would not have happened without the other.
Another condition of the 2002 licence fee decision has been met fully in the publication of very detailed analysis and financial reporting in each of the RTE annual reports submitted to Government since then. Uniquely among western European broadcasters, RTE publishes an income statement for each of its services and sets out clearly its publicly-funded and commercial activities. Rigorous oversight of the use of public funding is entirely appropriate when RTE is called to account for its activities. I believe we have anticipated those oversight requirements and in many instances have acted before national or international regulation required in order to achieve improved transparency.
Equally important to the future welfare of broadcasting, which is funded in part from the public, is the opinion of the public itself. Our most immediate guides to this are the respective shares of audience enjoyed by each of RTE's services. Fragmentation is the order of the day in all broadcast media as new services are licensed by national regulators and digital distribution brings hundreds of television channels and services to Irish homes. While RTE faces very stiff competition from national and international television services and from vibrant local and national commercial radio, the performance of RTE's services with the listeners and viewers has borne out the central premise of the 2002 licence fee decision to support investment in content creation. In digital television homes — now well over 50% of homes surveyed — RTE's share of viewing in peak time increased year on year up to the end of May 2009.
In radio, as members know, the story has been more mixed. RTE 2FM, which does not draw on licence fee funding, has suffered more protracted loss of audience share but it does compete in the most hotly contested arena for 15-35 year old audiences and we are taking steps to address this decline, even in this depressed market. RTE Radio 1 has arrested decline and has succeeded in increasing its share and reach of audiences across most day parts in successive recent official listenership surveys. I am not recording these increases in viewing and listening with any complacency. These successes have been hard won and are due to many factors, including access to better funding, better use of creative talent, greater efficiency in our own programming and in what we have commissioned from the independent television sector, a keener sense of audience expectation and a willingness to give new talent a chance to develop.
Each of the annual reports to which I have referred for this period showed RTE generating a modest surplus. This money was intended to be set aside for the major investment we have always signalled as required to achieve the orderly transfer to a completely digital environment, from initial recording, to production and post-production and to distribution, whether that is via satellite, cable or the digital terrestrial television infrastructure which RTE is required to establish. In the last published annual report for 2007, I signalled a concern about the likely downturn and indicated RTE would have to have serious regard to its rising cost base, notwithstanding all the indicators of successful performance I have already mentioned.
So it transpired. By April-May of last year we identified early indications of a potential downturn in advertising revenue brought on by the general cooling worldwide. In mid-summer we indicated to staff through the trade union group that we were concerned about achieving our budgeted outturn. We promised to revert with firm forecasts in September and, with proposals to address the projected shortfall, in June we projected a revenue gap of €25 million despite a good first-half performance. As it transpired, the shortfall by December came to €26 million. We had taken steps to address it, including immediately cancelling any performance-related payments to management grades in respect of 2008 and a wide number of other cost-saving initiatives. We have reported a break-even performance for 2008, which will be published officially in coming weeks. We also anticipated the further worsening of the commercial climate and secured agreement with unions and staff to postpone the then recently agreed national wage agreement until 2010. I wish to thank our staff for being the first in the public sector to take such a step.
An interim budget for 2009 was approved by the outgoing RTE Authority in November 2008. It was framed as an interim budget precisely because of the rapidly worsening climate and because of the fundamental uncertainty surrounding the reliability of anyone's forecasts in such a turbulent market. At the start of this year we observed a further deterioration in the advertising market and, as a result, in February we indicated that revenues could be off target by an estimated €68 million as against original expectation and due entirely to commercial revenue fall-off. This is an unprecedented decline in commercial revenue but it is no different from that experienced by other media organisations which depend so heavily on commercial funding.
Again this forecasted shortfall was immediately communicated to staff and a number of actions to address it were identified. RTE explained that it wished, as much as possible, to protect the creation of content for our viewers and listeners and that it wished, as much as possible, to protect employment. Some €27 million of savings are being extracted from initiatives which flowed through from actions identified in 2008. The other €41 million was categorised under four broad headings. Approximately €10 million is being sought in additional efficiency and cost-cutting initiatives across the whole organisation in respect of non-staff items. This does mean cutbacks in programming but it is our intention to carry out this painful exercise in a way that least damages the quality, variety and competitive strength of our various programme schedules in the delivery of a range of public services. Another €10 million has been targeted from once-off, non-recurring savings and a further €10 million in commercial initiatives to lessen the decline in advertising sales revenue is planned.
A final €10 million in savings in pay-related operating costs is also being sought. From this last target came our request to staff to accept voluntary pay cuts across the board. This has been the subject of intensive negotiation with the trade union group. The proposed model for pay cuts agreed with the TUG is being voted on at the moment by members of the trade unions in RTE but I will not hazard an opinion as to the outcome. However, we have said to staff at various meetings held in recent weeks that we firmly believe this is the best option for all of us in order to maintain our connection with the audience. It is unquestionably painful for staff who have also had pay packet reductions arising from recent budget decisions, but it is nothing more than what a considerable number of companies in the private sector have already introduced. It is as proportionate and fair as we can make it.
I have gone into this level of detail in order to let the members of the committee know that, far from the picture painted in a number of recent newspaper reports, this very difficult situation is being managed and will be managed. There will more difficult decisions ahead but we will take the appropriate decisions mindful, as much as possible, of the key elements I have already mentioned — output and employment.
Despite all the challenges, our commitment to our public purpose remains undiminished, as I hope members will have noted in recent coverage of the various election campaigns for local government, the European Parliament and the two Dublin by-elections. It was also very evident in the investment in results coverage over the weekend on radio and television and in two languages across four services. Members will have seen reports on the audience figures for the television results programming on RTE 1. It is also important to record that a service which is not, as yet, funded from the licence fee also contributed to instant dissemination of results and analysis and performed an important public service, namely, the RTE website. By way of illustration here are a few figures relating to that service. Over the four days of election coverage there were 12.8 million hits to the RTE website. There was an increase of 20% in traffic on the 2007 general election and in excess of 225,000 unique users per day and 330,000 unique users on Monday. Hits to the RTE news site exceeded 6 million over four days and the dedicated election site generated 5 million page impressions. Visits from outside of Ireland accounted for 30% of the weekend traffic and 823,000 audio and video streams served off the main website, with more than 76% of those streams served live and more than half of the streaming visits coming from overseas users. News Now, RTEs always on, live and looped on-line news service, generated a total of 37,000 streams off the RTE.ie and RTE Player. Some 65% of News Now website visits were from outside Ireland — a clear indication of the Irish diaspora’s recourse to RTE as its information source of preference for news from home.
Overall viewing numbers on RTE Player, RTE's on demand catch-up TV service, also increased dramatically over the weekend as viewers caught up with televised election content with streaming numbers hitting in excess of 25,000 on Saturday. Users of RTE.ie’s other services, including Aertel On-line and Aertel Mobile, as well as RTE.ie’s mobile site increased over the election weekend. Unique visitors to RTE Aertel On-line increased by 42% while page impressions increased by 114%. Traffic to the dedicated Aertel Mobile site and m.rte.ie increased by 32% and 158% respectively.
There is no doubting the turbulent nature of the times we are living in — a watershed of social, political and economic change. Within the short span of last year, three decades of unchallenged confidence in the market have reeled and crumbled. Assumptions about the power of the market for almost limitless good have been tested and exposed. In a world where market thinking has dominated, it is possible to regard only the measurable as valuable and to reject as less tangible, and therefore less important, those other values that are in the aesthetic or the cultural, in the experiences and events that unify and bind communities together or in things that uplift or inspire or inform.
These things in the pure market can be seen as second-rate but to the Irish public they are not. They pose for us more fundamental questions. These are questions about quality, not quantity, and they are more difficult to debate and more challenging to answer. They include such questions as "What broadcasting serves the community best?", "How is broadcasting to survive as a social value, and not simply as a consumer proposition?", "How can we properly value independent news, creative drama and comedy, excellence in classical and traditional music?", "How can we ensure free-to-air coverage of sports, so that the entire community shares the experience?" and "How do we keep a place on the airwaves for the faces and voices of our own children?"
A public service broadcasting organisation like RTE has to heed these questions of quality. We must also be efficient, effective, transparent and accountable. We must not be wasteful or presumptuous in any way about the public funds and commercial revenue that pay for television and radio programmes. Equally, however, we should not regard the market as the be-all and end-all. There are more important tests than those of the market. The test for us in RTE is to be resilient and effective in these troubled times and never to lose sight of our core purpose of serving the Irish people.
