Léim ar aghaidh chuig an bpríomhábhar

Tuesday, 25 Feb 2003

Vol. 1 No. 8

Broadcasting Policy: Ministerial Presentation.

I propose to take the presentation by the Minister first, followed by the scrutiny of EU legislation. Is that agreed? Agreed.

I welcome the Minister to the joint committee. Members will be aware that part of the communications brief covers broadcasting. It is important that we hear the views of the Minister.

I thank the joint committee for its invitation. The officials joining us from my Department are Katherine Licken, Ciaran Ó Hóbáin and Eamon Molloy.

My objective is to encourage high quality Irish radio and television services and the retention of access, on a free-to-air basis, of quality programming on analogue and digital platforms. My Department has effected a fundamental review of broadcasting policy and the measures surrounding it. The forum on broadcasting was established by my predecessor and has reported during my tenure. While this report has informed our position on broadcasting in general, it has, in particular, informed our position on the RTE application for a licence fee increase. Since coming to office one of my main tasks was to meet RTE regarding its application for this increase. Officials from my Department met RTE on a weekly basis until the Government decision on the licence fee. My officials made a strong input into the RTE application.

The Department has agreed on a fundamental reform of the public service broadcasting sector. The Department must now implement the changes that flow from the Government decision on the RTE licence fee. Increasing the licence fee was a major decision in that it gives RTE what we believe to be the necessary resources to deliver the type of service the public demands. We will continue to implement those decisions and introduce legislative change. We will continue to ensure the highest standards of corporate governance within RTE.

The issue of accountability and transparency for RTE was one of the key issues we focused on in our discussions with it. Arising from that, RTE is planning to introduce a public service broadcasting charter. This charter will set out the remit of public service broadcasting from RTE's perspective. It is expected that the charter will be published in draft form in the near future. There will be a public consultation process and we hope to be able to sign off on the charter in April or May 2003.

The forum on broadcasting recommended that RTE publish a statement of commitments annually to specify the output it would deliver each year. The output has to be specific, measurable and independently verified at the end of each year. My Department is working with RTE on this statement of commitments.

The forum on broadcasting also recommended that RTE should appoint an audience council to act as an advisory group to the authority. RTE is consulting with representatives of organisations and individuals in the area of broadcasting with a view to forming an audience council. I hope to see the council appointed by the middle of this year.

RTE has promised to publish a code of fair trading practice. This will be a manual for fair trading practice that others interested in broadcasting could use to see RTE's use of the licence fee. Future increases to the licence fee will be conditional on the delivery of the commitments RTE has entered into and the implementation of the changed management structure. While it may not be readily apparent to members or the public, the changed management structure of RTE is one of the key issues. A long time was spent working with RTE regarding the changing of the management and financial management structure within the organisation. It has agreed to break up the organisation into integrated business divisions which would have full accountability. Each division, in effect, would be separate and would have senior financial personnel recruited to each of the divisions.

A new financial management system will also be introduced which will significantly improve the scope of tracking and reporting on all income and expenditure, which is something that was not really properly carried out heretofore. Officials of my Department are working closely with RTE in regard to the changed management objectives and commitments. Despite what members may have read in the newspapers, particularly over the new year period, we estimate that RTE will come forward with a loss in 2002 of €20 million. This is obviously before the licence fee kicks in, with the exceptional items adding a further loss of approximately €35 million in regard to re-structuring and re-organisation costs. Obviously the licence fee change will result in a situation where fairly dramatic changes will take place over the next few years.

In regard to the licence fee collection arrangements we have agreed, as part of the decision, that there would be a liaison group made up of officials from my Department, An Post and RTE to examine ways of improving the efficiency of the collection system. An Post has agreed to establish a dedicated business unit for licence fee collection. The Department has agreed a one-year contract with An Post which includes a minimum threshold target figure of 1.17 million units for 2003. This is an increase of 25,000 units over the 2002 figure. We believe the 2003 target is achievable and somewhere in the region of 1.19million units could be reached. There are incentives built into the system if An Post gets over the target.

There are a number of other issues. The establishment of TG4 as an independent statutory body has been on the agenda and was indicated in the programme for Government. I intend to bring a proposal to Government shortly to give effect to the commitment in the programme for Government in regard to its establishment as a separate entity.

We are preparing legislation in regard to the public service broadcasting fund which was set up with money set aside from the licence fee increase. This will be a relatively short Bill. The legislative proposal in regard to the single content regulator is being prepared at the moment. This, again, was part of the decision to create an overall regulator for the broadcasting service, which will be called the broadcasting authority of Ireland. As part of the licence fee decision, it was decided to, in effect, re-establish RTE as a commercial semi-State body with a board of directors and this will form part of the legislation.

We are currently working on the issue in regard to sports designation. I will bring forward the draft orders and the proposed legislation in regard to it in the near future.

In the past week or so I have started a public consultation process to examine the issue of the ban on religious advertising on radio and television to see if it is appropriate in this day and age. I was questioned in the Dáil in regard to the code of standards in regard to advertising, particularly directed at minors. Last November I gave a formal direction to the Broadcasting Commission of Ireland to draw up new codes and rules in regard to advertising in this area and a number of associated areas.

That is basically it. I hope I have given a flavour of where we are currently at and if there are any questions I will answer them.

I thank the Minister for his policy overview. I presume we will get a copy of your document.

This is a briefing document but I can make it available.

I wish to advise the Minister that it is our intention to allow TV3 and RTE to make presentations in the near future and indeed, also to invite in the Broadcasting Commission of Ireland. That is one of the reasons we wanted to be clear on Government policy in a number of areas.

I thank the Minister for coming before the committee to answer questions.

The Fine Gael Party agrees with him that the best way to ensure quality public service broadcasting is to adequately finance one strong State public service broadcaster, as we are choosing to do with RTE. We took the view in regard to the licence fee increase that the entire increase should not have been given at once but that it should have been split to ensure that the work that the Minister's officials are currently undertaking with RTE would be brought to a speedy conclusion. If some of the licence fee increase had been held back there would have been an incentive to do so. We would have adopted a carrot and stick approach which did not happen so we are now working in good faith. To be fair, that good faith is reasonably well-founded because there is a spirit within RTE that wants to change and offer the kind of service for which we are looking.

Within the broadcasting sector it is important that conditions exist to allow private broadcasters to operate. I have a number of questions that were raised by independent broadcasters and I would like the Minister to address them. The first relates to advertising. Is the Minister aware, or can he confirm, that RTE had to refund a certain amount of its advertising revenue because it could not deliver on the promises it made to people who had booked advertising with it? If that is the case, has he asked RTE for an explanation? Is it not reasonable to suggest that if RTE was over-booking advertising, there may be a suggestion of unfair trading in regard to others who were competing for that advertising revenue?

I would also like the Minister to comment on another accusation that the cost of advertising with RTE at the start of last year was the lowest in Europe and yet at the end of the year those costs had risen by 18% in one go. It seems to have been a dramatic increase at the end of the year, at the same time that allegations of under-charging were being made.

The second area I wish to ask the Minister about is in regard to transmission fees that are levied to TV3 and TG4. If TG4 is independent of RTE, why does TV3 pay up to four or ten times more for transmission fees than TG4?

When the Minister announced the licence fee increase, I understood that at the start of each year we would have a clear and detailed description of how the licence fee moneys were to be spent. This is the first year of that arrangement, so it should be done properly this year specifically. Where does the declaration of programming stand, given that we are now at the end of the second month of the year? People have the right to answers to that question.

The size of our population means that our public service broadcaster will never be entirely funded by licence fee payments, as is the case for the BBC in the UK. Does the Minister think it unreasonable to request that 85% of licence fee money goes directly into Irish-made programming? The BBC is entirely funded by the licence fee and manages to allocate 85% of the licence fee on domestic programming. RTE does not seem to be able to achieve 85%, despite the fact that it is also financed by advertising revenue of up to 40% of its total income. I would like to see 100% of the licence fee going into Irish-made programming, but to try and achieve that overnight would be unreasonable. However, we should try to target 80% to 85% initially, increasing to 100% over time. What are the Minister's views on that? We should be able to cover the costs of administration with the advertising revenue that accrues to RTE.

I welcome the Minister's comments on licence fee collection and the discussions he is having with An Post in that regard. We can make significant improvements in that area. Does the Minister intend to insist on requiring that a specific percentage of prime time schedules is dedicated to public service programming? It would facilitate TV3, for example, to capitalise on revenue at that time of the day and would emphasise RTE's public service broadcasting role.

I thank the Minister for his cogent outline of the current policies on broadcasting. The Labour Party supported the increase in the licence fee because we felt it was important to reduce the dependence of the national broadcaster on advertising. We also approved of the attendant structural changes which will enable the station to pay its way in future.

The Minister referred to RTE's €20 million loss for 2002 which, when added to exceptional items, is €35 million. Is he now convinced that we will not have a re-run of this kind of crisis in three or four years? When the Minister is coming to the end of his term in office, will there be another difficulty of this nature? Are the financial and managerial changes and the business plan sufficient to enable us to have a profitable semi-State body discharging its public broadcasting function adequately? In that context, I welcome the Minister's comments on the licence fee connection.

I assume there will be legislation to make TG4 a fully independent station. Given that it is subsidised by some €31 million a year, what mechanisms will sustain it, notwithstanding its vital role in the maintenance of our national language and the fact that it has been a youthful and innovative station? I welcome the Minister's remarks about the customer charter and the comments of my colleague on domestic programming.

Did the Minister give any thought to the better presentation of this House in his discussions with RTE? I know it depends on Members and the work we do, but people have drawn comparisons between RTE's and the BBC's presentation of parliamentary politics. Is there a more dynamic way in which this could be covered?

The new single content regulator represents a major change in the determination of public sector broadcasting. Has the Minister thought about how that mechanism will work, particularly regarding the representation of workers in RTE and commercial stations? Are we correct to assume that the EU Commission has approved our ability to designate our sports events of national importance after the Minister's presentation to the Commission committee?

In a recent speech, the Minister appeared to be reversing policy on the digital platform, which his predecessor seemed to have abandoned and which seemed to be an interesting development for RTE and other broadcasters. He now seems to feel there may, after all, be funding available to create this and give a great deal more choice to viewers and listeners.

I thank the Deputies for their comments.

Deputy Coveney referred to a carrot and stick approach but we should be fair. RTE made an application to the Government for a considerable licence fee increase, which it did not get. In July 2001 the Government stated there would be an increase of £14.50-€18.70 - with the specific commitment that RTE would get a further substantial increase at a particular time if it met certain conditions. It did not meet those conditions but, when I entered office, I sat down with RTE. On a weekly basis we held discussions based on what was coming from the forum on broadcasting. It was the first time a Government Department has had such a hands-on interaction with RTE, something it welcomed.

The original decision was the carrot and stick approach. The last decision we made before 2003 was the fruit of considerable discussion. It might be said that this was RTE's application for an increase. We agreed that when we were going through this, we would reach a stage where the Government would not drag out the process once the application was made. There was an understanding that in coming forward with the application a quick decision would be made because of the extreme financial difficulties RTE faced - a loss of €20 million for 2002 with exceptional costs. If it was to continue, based on the licence fee, RTE would have gone out of business, would have had to curtail severely what it was doing or change its ethos.

Advertising has been raised with me time and again. It is not strictly within my remit because it is part of the commercial side of the running of RTE. If anyone has a problem with how RTE operates advertising, he or she should approach the Competition Authority. I cannot look at the issue of sustaining public service broadcasting one day and then intervene in a dispute between RTE and an outside body. The Competition Authority is the body to which complaints should be made. Advertising is, however, a complex issue.

TV3 negotiated and agreed with RTE on the transmission of its signal. I have no direct control over that because it was a contractual situation arrived at between RTE and TV3 that predated my involvement.

TG4 and TV3 cannot be compared but there will be implications for TG4 regarding the fees that are levied if it becomes independent. That must be addressed in the future. The legislation already exists for TG4, it is matter of bringing forward an order. Deputy Broughan referred to the crucial issue of the future funding of TG4. The Exchequer subvention it receives goes entirely to home-made Irish language programming. Most of its advertising revenue goes on other non-Irish language programmes.

Deputy Coveney raised the statement of commitments. The decision on the licence fee increase was only made in the last weeks of 2002. We hope the statement of commitments will be published in the not too distant future. It is envisaged the statement will be an annual document published by the end of January each year.

A comparison with other countries shows that the licence fee increases still left the cost far below those of the majority of other European countries. Our television licence costs €150 while in Austria it costs €221; in Belgium €190; in Denmark €253; in Finland €166; in France €144; Germany €173; in Greece only €36; in Italy €91; in Sweden €168; in Switzerland €182; and in Britain €173.

They are not all dual-funded.

All of them except Britain are dual-funded. It is impossible to equate a tiny market like Ireland with the huge market available in Britain where the resources from the licence fee are as much as €2 billion. RTE and the BBC cannot be equated.

Deputy Broughan asked if this will be the final run. I cannot tell. The licence fee increase still leaves us below most other European countries. Much depends on the ability of RTE to contain its costs into the future and much depends on the advertising revenue RTE will fight for within the independent sector. The economy is not as buoyant as it was and even after the past five years, RTE still posted a loss of €20 million in 2002. We must keep a close eye on it.

Work did not finish when the licence fee application was granted. My Department has met RTE to agree a position as we move forward to ensure the commitments given are delivered on in exchange for a substantial increase in funding by the taxpayer.

The broadcasting authority will work in a way similar to the work of the Broadcasting Commission of Ireland in the independent sector. It will evolve as we go forward with the legislation.

I have always endeavoured to address the issue of worker-directors in all legislation. However, we are not dealing in this instance with one body but an entire sector of independent broadcasters and RTE.

I hope to bring a draft order on sports designation before the Oireachtas, as is required following the recent successful decision of the EU Commission contact committee. Officials and some of the other countries represented on the committee complimented the application we made. One country said it would use the Irish application as a template for its own in the near future. I will introduce a draft order and the necessary legislation to the Houses of the Oireachtas. The legislation will provide for the establishment of an arbitration system, which the sport organisations will welcome.

With regard to the question of digital terrestrial television, one application was made under the previous regime by ITS TV, which it withdrew following a review of its position. We must, therefore, consider other ways of introducing DTT to Ireland. The possibility of an all-Ireland platform may be considered, perhaps along the lines of the United Kingdom free view model. My officials have had preliminary discussions on this with their counterparts in the North.

Will the Minister confirm that there will be significant increases in the television licence fee for public houses, restaurants and bars?

The Minister may be aware that I worked in RTE for a number of years, although it is almost ten years since I left the organisation. While the world of broadcasting has changed since then, I speak from experience. According to a report in today's Irish Independent, in future new applicants for free television licences, that is, old age pensioners, will be turned down. I understand that a misunderstanding arose when existing licence holders were told they would have to pay for it. However, new applicants, that is, those who are about to qualify for what was a free television licence will no longer be eligible. Will the Minister confirm if that is the position?

It is understandable that the position at RTE should be considered from a purely commercial angle. In this regard I welcome the establishment of the Broadcasting Authority of Ireland because it is an independent body. However, the setting of the television licence fee by the Department creates a difficulty between the authority and the Government. Will the Minister indicate his views on the proposal that the licence fee should be set by a body acting independent of the Government and that account should be taken of inflation and costs incurred by RTE?

As a public service broadcaster, RTE has a level of responsibility not shared by a normal commercial television station. For example, in an era of substantial foreign news issues, it is important that the country hears the Irish view of the world from places such as the United Nations and the Middle East, and that we are not confined to hearing it from the BBC or other channels. The cost to RTE of foreign news coverage can be exceptionally high. I recall a situation which I hope no longer pertains where, on occasion, an RTE reporter abroad would rely on a piggyback at the end of a satellite feed booked by the BBC to get a piece of reportage back to the station as a favour from its larger and much better resourced sister organisation. This is an example of the need to resource the public service element of the broadcasting organisation. In view of the level of competition in the era of digital television, it is important that there is a high level of commitment to ensuring that the Irish nation hears the news from an Irish voice and that it is well resourced.

I thank the Minister for his contribution. I am a little worried about the religious advertising review. Perhaps the Minister is aware of a character in County Louth, known to me, who has started his brand of religion. I would not like to think of what may happen if he was to start advertising.

He mentions the Deputy and me a lot.

Will the Minister use his influence in the discussion between An Post and RTE to ensure that people will have the opportunity to pay for their television licences over the course of the year at an interest free level? Those who are unemployed or on low incomes arguably use the television service more than most and they would benefit from that.

With regard to developments on digital terrestrial television, are there any plans to develop the current service to the North? Perhaps that issue is obsolete, but will the Minister indicate if there is any timescale regarding the development of DTT?

Will the Minister indicate the cost differentials between bought and indigenous programmes, especially in areas such as drama, lifestyle and investigative journalism? While all members of the committee advocate a considerable increase in the number of home produced programmes, what will be the cost effect? Will RTE be able to deliver?

Senator O'Meara referred to a report in today's Irish Independent regarding a proposal to charge old age pensioners for their television licences. A delegation from RTE made a recent submission to the committee regarding its request for a licence fee increase. I was, therefore, surprised to read that the decision to axe the free licences was made at an executive board meeting of the cash-strapped station in January. Perhaps the report is incorrect, but it has created much concern. I have already received inquiries about whether the scheme is to be abolished. The Minister was formerly Minister for Social, Community and Family Affairs and I always understood that Department covered the cost of the scheme. Perhaps he will clarify if RTE is losing money because of the scheme.

The Minister rightly said the question of advertisements was a matter for RTE. However, it would be understandable if any competitors were to express concern if they considered that predatory pricing was applied, especially given that the station is bankrolled by a licence fee of €150 per year by viewers. They do not get any revenue from this source of income.

I am pleased Senator O'Meara and Senator Finucane raised the question of the licence fee set out in the article in today's Irish Independent. I addressed one aspect of this issue when I was Minister for Social, Community and Family Affairs. I was pleased to be able to lower the bar for old age pensioners, irrespective of who lived in the house. In order to quality, one had to live alone. However, I decided to extend the scheme to people over the age of 70 rather than 75.

I read the article at approximately 7.30 a.m. and I was surprised. I immediately rang one of my officials and it transpired it had nothing to do with the free TV licence scheme. It related to an issue about which I was not aware until this morning. Apparently RTE traditionally paid the licence fee for pensioners who left its employment. If Senator O'Meara had remained in RTE, she might have got a free TV licence. It appears letters were issued in error to approximately 150 of 600 pensioners advising them that the scheme would end from March 2003. In other words, a new RTE pensioner would not get a free licence, but the existing ones would be retained. I asked RTE to publicly clarify the matter and I informed my successor in the Department of Social and Family Affairs. Her Department received a considerable number of telephone calls on the issue. I am pleased to be able to clarify the matter.

In reply to Deputy Kelly, it was decided to consider the issue of a commercial licence in relation to the experience in other countries. Most, if not all, other European countries have a commercial licence. In Austria it is €215 for TV and €65 for radio, in the Czech Republic it is €26 for TV and €12 for radio, in Denmark €267, Finland €165, France €116, Germany €173 and Iceland €285. They all have a commercial TV licence. This is being considered in conjunction with RTE. It may be brought forward, depending on the workability of the proposal.

I agree with Senator O'Meara in regard to political involvement. I wanted to get away from the suggestion that RTE was always going cap in hand or that it was in the pocket of the Government. I did not think that was good for the political process or for RTE. It is one of the reasons the Government decided the licence fee should be increased annually, following independent valuation. We decided we would work with a formula which is used in many other areas whereby RTE would get the consumer price index increase, minus X, X to be determined on its performance in the previous year. In other words, RTE would get up to but no more than the CPI, but it could even get less than the CPI. It would be based on the recommendation by the independent body, the BAI, which would make a recommendation and, ultimately, the Government would act on the recommendation.

Apart from the annual licence fee increase, the CPI minus X, it was proposed that there would be a formal review every five years of the RTE licence fee and its funding. In other words, the process on which we embarked would roll-over every five years, but any increase would be independently evaluated conditional on its delivery of its commitments. My rationale in this regard was to take the issue out of the Government's realm.

On foreign news coverage, RTE foreign correspondents would, in effect, have had to go if the licence fee increase had not been granted. As part of its commitment to the licence fee increase, RTE has agreed to expand on the location of foreign reporting. That is one of the specific commitments with which it must comply.

Deputy Morgan raised the issue of home-produced programmes. It costs approximately €75,000 to €100,000 per hour to make a home-produced programme as opposed to €3,000 to €5,000 for a non-home-produced programme. There is a dramatic difference. If we did not give RTE the licence fee increase, it would have had to buy in foreign-produced programmes at a hugely reduced cost. It would have ended all RTE's home-produced programmes.

Someone referred to peak times, which has changed for the better, even since the licence fee increase. Between 6 p.m. and midnight tonight, RTE will carry the following home-produced programmes: "Six-One News", "News at Nine", "Eco Eye", an Irish documentary, "Fair City", "Prime Time", "Arts Lives", a documentary on Alan Simpson, "The View", an arts discussion, "News Summary" and "Oireachtas Report". On the morning of the Cabinet decision, I produced the paper indicating a large proportion of Irish-produced programmes on RTE 1 that evening.

Deputy Morgan raised the issue of people on low incomes. We decided to allow people to pay the licence fee on a monthly basis. My Government colleagues and I insisted that this should become part of the process.

In regard to DTT, all I can say is that we are considering the matter. The experience in the UK in regard to DTT has not been good. It is an expensive process but it is the way broadcasting is going. Either we are in it fully, or we are not in it at all. It is something we are considering in the context of a changing economic situation.

Can the Minister give me——

No, I cannot. However, the Deputy will be happy to know that it will be used to get RTE, in particular, into every area north and south of the Border, if we had a DTT platform. We had discussions with our northern counterparts in this regard.

Now that broadband is being rolled-out at a rapid rate throughout the country, for which we commend the Minister, and given the standard of broadband and the fibre optic cable, is there an opportunity for digital terrestrial television in terms of spare capacity. We saw a fibre optic digital television system in Ephrata in Washington state in January and it was superb. Are the Minister and his officials looking at similar systems?

Yes. The technology changes very quickly - it is not even standing still as we speak. Broadband could be used but the fibre optic network is restrictive because it is only in place in certain locations in the State. There are alternatives. Wireless LAN can show videos. I have seen some and the definition is incredible. Grid and mesh technology will also hopefully fill in the gaps for non-fibre broadband.

I compliment the Minister for outlining his position clearly and succinctly and congratulate him for presenting his case to Cabinet. RTE was justified in seeking an increase in the licence fee. With regard to the financial circumstances, would RTE have survived in its current form without a fee increase at this level?

Will the Minister outline his views on Sky Television? Is it possible under Irish or EU legislation to regulate Sky and the programming it transmits into this State. It is based in Britain and can therefore say it is not an Irish company although recently it began to broadcast Irish advertising. Is it impossible for us to regulate its content or is it accepted that it is a foreign television station broadcasting via satellite into Ireland and that is that? RTE and other competitors in Ireland would be interested in the Minister's views.

RTE would not have survived in its present form without an increase in the licence fee. It was living off the quickly dwindling proceeds of the sale of Cablelink. It was not just a matter of granting it an extra few euro. There is an understanding about changed management structures in both financial and personnel areas. The organisation had to change the way it did business rapidly. Previously divisions within RTE did not know what the others were doing. That will change quickly.

Sky Television is an issue for the regulator. It is being examined at EU level as a result of directives that are being transposed into law, particularly between now and July 2003. There is a fallacy about Sky. I have heard it said that it pays nothing to the Irish Exchequer. If a person takes up Sky, he or she pays VAT at source. It is paid to the British authorities because it is based in Scotland and we cannot charge a double levy. It is like buying goods in the North, VAT is payable there. The Television Without Frontiers Directive is being looked at. We are not in this on our own. Other countries want to level the playing field between external and national broadcasters. It is an issue which will be to the fore in the next 12 months. Television Without Frontiers is being looked at in the context of change by the EU.

I thank the Minister and the members of the committee for the work they have done today. It is important that the Minister addressed the committee before other groups come in to discuss this issue. TV3 will appear before the committee in two weeks and it will be concerned about transmission fees and network access. It will also have questions about advertising.