Mr. Paul Mulligan:

Thank you, Chairman, for your welcome. I do not intend to read the statement I have submitted in full, as it is on the record, but I will take a short amount of time to summarise the main points and, perhaps, give the committee additional information as regards the procedures which are in place in RTE which might be helpful for the members in directing their questions later.

RTE is a public service media provider in receipt of public funds. It is aware that it is owned by the audience, the people of Ireland. This imposes additional pressures, and rightly so, to protect the audience and its interests. If a commercial company's prime responsibility is to its shareholders, a public service media organisation's primary responsibility is to its audience. On the other hand, RTE is charged by law to maximise its commercial revenue. This is done to supplement the licence fee it receives. This mixed funding model is intended to lessen the burden on Irish households and the State and allow the organisation to fulfil its public service obligations. This dual funded model is not unique to Ireland. The model has been in general use across Europe to fund public service broadcasters for 60 years.

RTE is not a commercial company. It does not make profits, nor does it have a responsibility to shareholders to deliver dividends. Instead, any income over and above operating costs is reinvested in additional programmes, output and facilities to serve the interests of its audiences. To document the priorities in this regard RTE produces a public service statement. This statement is obviously available on its website but is also widely publicised and advertised. Indeed, we are advertising at present for input to a review of that public service statement from organisations and individuals. The statement sets out the principles that the organisation must observe to undertake its activities. The first of the principles is of particular interest to this inquiry. It states that RTE will remain independent of any vested interest. I will return to this later in my remarks.

I will move on to speak about the commercial revenues and activities, and my experience of these over the 25 years I have been involved and particularly in the period that is of interest to the inquiry. The major commercial revenue in the years leading up to the banking crisis was advertising revenue, driven mainly by television advertising and, to a lesser extent, sponsorship.

Despite the restrictions placed on RTE’s ability to generate advertising revenue as against that available to commercial broadcasters, RTE’s advertising revenue grew significantly by 55% during the period under review, with television advertising revenue growing by 60% over the period.

Throughout that period, revenue from the property and financial sectors grew, yet the proportion and relative importance did not. Property advertising at its highest point reached 0.9% of advertising revenue; at its lowest point it was 0.3%. The total financial sector, including insurance, building societies, credit cards, banks, credit unions and so on, accounted at the highest point for 4.6% of RTE's revenue, but generally worked out at an average of just over 3% of its total revenue.

My background is in economics and I have worked for many years in RTE generating revenue. In more recent years my responsibilities have also encompassed the growing area of regulatory affairs. In this regard I have been involved in European directives, broadcast legislation, submissions to the Broadcasting Authority of Ireland and the development of commercial codes. I am currently a board member of the Advertising Standards Authority of Ireland, which develops codes for all media in the Irish market, and I chair the on-demand audiovisual service, which develops codes for on-demand providers. I mention these activities so that the committee understands that at the core of the guiding principles behind these directives, legislation and codes is the protection of the consumer of commercial messages. My involvement on behalf of RTE in these bodies is to ensure that the principles sacrosanct to a public service organisation are as far as possible mirrored in the wider media environment.

Before concluding my opening remarks, I will return to my first point about RTE’s public service statement about remaining independent of vested interests. The statement goes on to clarify this in more detail, stating that it will follow these principles by "Ensuring the integrity of its services and that editorial decision-making is not subject to undue influence from any commercial, political, religious, social or cultural interest." In furtherance of this principle within the commercial area, RTE has in place clearance committees. All commercial activity, whether sponsorship or advertising, is cleared through those clearance committees before it is allowed to go to broadcast. These clearance committees make sure that the provisions of the codes are applied fully, including those which are relevant to this committee, to do with the transparency of commercial content and its separation from editorial content.