I thank the Chairman for the invitation to appear before the joint committee this afternoon. We hope our submission is useful as the committee considers the potential for job creation, innovation and balanced economic development in the creative sector. RTE believes there is significant potential for more than 500 new jobs to be created if a greater level of financial stability can be restored. It envisages that the bulk of this job creation would take place in the independent production sector. Over the past five years, RTE has shed nearly 500 jobs and the independent sector has lost more than 300 jobs. RTE's total annual revenue has decreased by more than €100 million. It receives approximately €180 million in licence fee revenue each year. It currently commissions approximately €40 million of programming from the independent sector. This equates to approximately 45% of RTE's commissioning expenditure when news and sports are excluded. In the past, we spent more €70 million in the independent sector each year.
Ireland is a small open economy. The Irish media ecosystem is exceptionally open. Throughout the world, advertising is a key element in the funding of the creative economy. The estimated value of the advertising market in 2006 was €1 billion. Its value is now estimated to be just over €700 million. The Irish creative sector depends hugely on advertising to fund content, which in turn creates employment. Ireland has had a uniquely sharp contraction in advertising over the past six years. RTE advertising has dropped by 40% during this timeframe. This has led to a very significant contraction of approximately 20% in employment. Online advertising now accounts for just over 20% of the market. The equivalent figure for television is 25%, for print is just over 21% and for radio is 13%. Sponsorship accounts for 13% of the market, and other forms of advertising, such as outdoor and cinema, account for 8% of the market. The number of UK television channels selling Irish advertising increased steadily between 2004 and 2011. There was a marked increase in this activity in 2012. There are 36 UK channels operating in the Irish advertising market. As most of them produce little or no Irish programming, their employment benefit is minimal. Supporting Irish content production is central to creating jobs in the creative audiovisual sector.
RTE’s revenue is approximately €328 million. We are the single biggest producer and commissioner of Irish programming. I will put this in context by explaining how we support job creation. In any one year, RTE drama engages between 350 and 500 actors. While a number of Irish actors who are based in London come back regularly for work, the majority of actors who work on RTE productions are based in Ireland. As the Irish advertising market becomes more fragmented, RTE's share of that market will decline. Our reach is still very high, with over 94% of Irish people using one or more of our services in any given week. More than 4,380 hours of home-produced television programming were delivered by RTE in partnership with the independent sector in 2014. Drama had a particularly strong year with "Amber", "The Fall" and "Love/Hate". RTE broadcast all of the top 20 most watched programmes in Ireland in 2014. As the advertising market becomes more fragmented, it is imperative that Irish content is fully exploited commercially and valued economically. The market for the distribution of high-quality television content in Ireland is changing radically. New platform operators that are entering the market are bundling TV services with broadband and telephone services in an effort to own the home.
In the United States, the issue of retransmission fees was resolved over ten years ago following much debate and dispute. Television operators there now earn 15% of their income by charging pay TV platforms for their content. In recent years, ITV and Channel 4 have put retransmission fees firmly on the agenda in Britain. Perhaps some members do not know what the retransmission fee debate is about. It is about the flow of payments between broadcasters and TV platforms for their content.
In September last year, the ITV chief executive, Adam Crozier, said that the majority of viewing on pay TV platforms is public service broadcasting, PSB, programming - in Ireland it is approximately 30% to 40% of what is watched on pay TV channels - and whether it is the producer or broadcaster investing in creating that content, it does not receive any payment. He went on to say that the impact of this wholly outdated regime is that UK public service broadcasters are forced to subsidise major pay TV platforms. Later in September, the UK Culture Secretary told a Royal Television Society conference in London that the UK Government would shortly begin a review into whether TV platforms, such as satellite, cable and so forth, should pay for carrying the main free-to-air channels. David Abrahams of Channel 4, speaking at the Edinburgh Festival, said that distribution or re-transmission fees could be worth as much as £200 million a year to the main free-to-air channels, because they accounted for the bulk of TV viewing on pay TV platforms. In Ireland, we estimate that 30% to 40% of our public service broadcasting content is on Sky and upc.
RTE has been considering this issue in an Irish context for some time. Over the past year RTE has conducted detailed research to understand much more clearly who creates value for whom in the relationship between Irish terrestrial broadcasters and the major pay TV platforms operating in Ireland. Working with us, Mediatique, a UK-based consultancy firm, has completed a comprehensive report on the value to pay TV operators in Ireland of having access to Irish free-to-air services and their content. Much like in Britain, the analysis is telling us that the financial benefits of the relationship are currently completely imbalanced in favour of the pay TV operators. Unlike the US or the UK, in Ireland this imbalance causes a particular difficulty because it results in huge amounts of potential investment for Irish programming and content leaving the country. This is directly affecting potential job growth in the Irish audiovisual sector.
We believe it is absolutely in the interests of Irish broadcasters, the broader Irish television production sector and, most importantly, Irish audiences that the Government closely examines the legislation that underpins the current imbalance. We have been engaging with the Department of Communications, Energy and Natural Resources on this issue over the past number of months.
Given that RTE is set up as a dual-funded public service broadcaster with a range of statutory responsibilities, the level of public funding it receives to fulfil its role is crucial. That is a responsibility of the Government. It is clear from any analysis or international benchmarking that the current television licence fee system is no longer fit for purpose. Just last week, the Minister for Communications, Energy and Natural Resources said that he will shortly bring legislation to the Government to help tackle licence fee evasion, which is currently estimated to exceed 15%, with the loss of over €25 million to broadcasters each year. The cost of collection is approximately 7%. In the UK, which has the same system, the evasion level is 5% and its cost of collection is 2%. We welcome this move towards reform of the current system.
The Minister rightly said that this is a matter of fairness. The vast majority of Irish citizens are making their contribution to the costs of quality public service broadcasting by paying their licence fee, but a significant minority continues to enjoy the benefits while expecting others to pay their share. However, it is also depriving the audiovisual sector of much needed investment. Successful reform of the licence fee system has the potential to act as a significant stimulus to a sector that has suffered a collapse in investment over the past five years, crucially without increasing the burden on individuals or on households.
RTE’s contribution to the creative sector is, of course, far more than just television. Our radio services and orchestras also play a vital role in the creative economy. Large numbers are employed in these areas. Our orchestras employ more than 120 full-time musicians and, based on the performance, this number is increased. This makes RTE the biggest employer of musicians in the country. Through RTE’s Supporting the Arts scheme, each year RTE supports many local and national arts events throughout Ireland through media partnerships and widespread cultural content across RTE services. In addition, RTE supports events by offering promotional air-time on radio and television. This airtime has proven vital in allowing events to grow and develop from year to year. Equally, every year new and exciting arts projects are established and look to RTE to help with getting the word out.
RTE is committed to working in partnership with the independent sector and third level institutions to maximise the sum total of our collective creative possibilities by creating a campus without walls that becomes a hub for creative content generation and new start-ups that can develop scale to compete internationally.
We are currently working on proposals for our site in Donnybrook and we have begun to deepen our creative partnership so that this vision can be fulfilled. The creative sector is sizeable. However, its value is not adequately expressed in hard numbers alone. Irish creative expression in word, film and art has significantly enhanced the reputation of Ireland. Since the 1960s RTE has contributed to the growth of the wider sector. We compete with the best-funded broadcasters in the world and as a national broadcaster we strive for the highest standards in journalism and creative production. Our journalists, technical and creative staff have moved into new ventures, either supporting growth in the commercial sector or providing necessary skill and expertise in the international production and film industry that locates in Ireland.
It is important that Ireland protect and nurture its creative capacity in a digital world that is global. Our creative expression and output reinforces our identity as a people and captures the richness of Irish lives and voices from all communities living on this island. It also has a very valuable economic impact in terms of the indigenous economy and export potential. The Irish market has changed fundamentally since 2012 and policy support is required to ensure that the creative sector can thrive in a fiercely competitive and international ecosystem that is oblivious to the protection and nurturing of what is unique and precious.