Ms Dee Forbes:

I thank the Chairman and committee members for giving us the opportunity to discuss the future funding of public service media in Ireland. The invitation is timely, as the issue is pressing and important for us all.

Media organisations in Ireland are under very serious financial strain. RTE, with its broad remit and reliance on commercial revenue to cover 50% of the cost of fulfilling its remit, is no different. In Ireland's case, the reasons for the financial challenges facing media organisations are multifaceted, with some specific to us and some consistent with trends across the developed world. Most of the challenges facing the media industry are for us to meet. The digital age is dramatically changing audience behaviour and expectations. Audiences now expect and can access the media they want free of charge when they want them on multiple devices. The Internet is powering all of this change and as broadband speeds increase and the price decreases, the pace of change will increase.

Digital advertising is the fastest growing category of advertising globally. The move towards digital advertising was an obvious strategy for traditional media companies as they built their online services. This has been greatly complicated by the emergence and dominance of social media services. Facebook and Google together take approximately 80% of global digital advertising revenues, while investing almost nothing in original journalism, programming or content. Their entire business models are built on selling targeted advertising around the work of others, with little or no compensation for the original producer.

Like the rest of the developed world, audiences in Ireland have embraced new video-on-demand entrants like Netflix and Amazon and new on-demand services from Sky, Virgin Media and others. So far, broadcast television and radio services have been more resilient than other media types against this digital disruption. Notwithstanding the advent of all this new technology, the consumption of linear broadcast television and radio services remains high among the population as a whole, even if it is shrinking somewhat among younger audiences. Despite much of the hype coming from the digital media industry, around 90% of all television viewing in Ireland is of live television, with an average viewing period of three hours and seven minutes per day. The figures show that over 80% of people in Ireland listen to the radio for an average of almost four hours per day. That amounts to over seven hours on average per person every day spent in consuming the so-called dying media.

The competition for audiences and revenue among broadcasters in Ireland is fierce. Among television broadcasters, it has increased massively. RTE has always had to compete with the best funded commercial and public service broadcasters in the world. Sky, the BBC, Channel 4 and ITV channels have been accessible to the majority of homes in Ireland for many years. The purchase of Virgin Media by Liberty Global and the subsequent takeover by Virgin Media of both TV3 and UTV Ireland mean that all national commercial television channels in Ireland are owned by one highly resourced international media organisation. This will bring new commercial competition for RTE, although it is not yet clear if this new dispensation will lead to significant increased investment in Irish programming or commissions from the independent production sector in Ireland.

The commercial radio market has seen similar consolidation. Ownership of that market is now dominated by Denis O'Brien's Communicorp and, most recently, Rupert Murdoch's News Corp. Between them, they own both national commercial talk radio stations, one regional licence and eight local commercial stations. Combined, they retain an audience share of over 30% of all adults and a considerably higher share of younger listeners. Both organisations also retain significant interests in other media properties in Ireland.

While increased choice benefits audiences in Ireland, the growth of the phenomenon of TV opt-out advertising has been much less beneficial. Enabled by the European Single Market, 50 channels sell advertising in Ireland. As many as 39 are wholly international, largely UK, channels that invest little or nothing in Irish content. Combined, they take €50 million from the advertising market in this country, nearly one quarter of all Irish television advertising revenue. While RTE operates with half of the advertising minutage of its commercial rivals, it has always met these competitive threats head on. By European standards, it retains a healthy share of the audience for both radio and television services. As somebody who has worked in the international television sector for 20 years, the quality of much of RTE's programming stands up to the best in the world. Frankly, offering choice means that it must do so. In 2016, in particular, this quality was showcased with a range of unique cultural and creative content to mark the centenary commemorations, as well as the general election, Euro 2016, the Olympic and Paralympic Games, the six nations rugby championship and the GAA championships. However, the creative and journalistic challenges never stop. RTE must continue to challenge itself, take risks and innovate if it is to maintain its relevance and sustain its connection with the public. That is the challenge for it.

The appetite for quality has not diminished with the arrival of much greater choice. With investing in new digital channels and services, as RTE has done in the past few years, making creative and distinctive programming ultimately offers the best opportunity to meet the increasing competition. The key focus of RTE will always be investment in high quality Irish programming, Irish storytelling and Irish journalism. That is what makes it distinctive for audiences in Ireland. In any given year RTE produces or commissions approximately 80% of Irish television programming. Simply put, without its investment in programming, Ireland would be just another television market dominated by UK and US programming, much like what happens in Canada. There is a cost ratio of over 20:1 between home produced and acquired programming. Therefore, the fewer resources RTE has the less distinctively Irish its schedules become, the less programming it can commission from the independent production sector and the less commercially viable its becomes as a dual funded public service media organisation.

Along with the creative and journalistic challenges, the commercial challenge is ever present. While digital expansion and increasing competition amplify the commercial challenges, they have been made much more difficult by Ireland’s recent economic difficulties and the current uncertainty thrown up by unpredicted political events. Advertising has improved over the past couple of years, but Brexit is now having a direct impact. Television advertising has been severely hit both here and in the UK. Just last week, theFinancial Timesreported that ITV is blaming uncertainty over a hard or soft Brexit for a sharp drop in advertising revenues, which it warned could fall by as much as 7% in the final quarter of this year. As yet, the impact of a Trump presidency is unknown but at the very least it is creating further uncertainty.

As RTE's financial retrenchment since 2008 has been well documented, I do not plan to go into it now. I have added as an appendix to my written submission a couple of charts which tell a clear story of RTE’s cost reductions over the past few years.  We can discuss this in more detail if the committee wishes. However, the committee needs to be aware that we are currently significantly underinvesting in key areas of output due to our very tight financial position. Drama, arts and culture output, foreign news and children’s programming are all areas that we want to strengthen.  Of course, RTE must continue, like any business, to reduce costs, and we will, but we now do not have enough resources to remain competitive or, in the longer term, relevant, let alone be the engine that drives the broader Irish creative economy. 

It is important for the committee to understand that it is not just RTE saying this. All the independent reviews that have been conducted over the past few years confirm this reality. These reviews have been comprehensive. They analysed, internationally benchmarked and reviewed in detail almost every aspect of what RTE does and how it does it. As the committee will be aware, a number of very clear conclusions and recommendations have emerged from this review period. RTE has been judged to be efficiently run against best international benchmarks and the scope for further cost reductions is limited. Given the complex dynamics in the Irish media market, Indecon has concluded that RTE is likely to continue to lose market share over the next four to six years, limiting its capacity to significantly grow commercial revenue in the medium term. The BAI has recommended that public funding to RTE should be increased in both its five-year review and more recent annual reviews. NewERA also recommended that consideration be given to increasing public funding to RTE. As concluded by Crowe Horwath, RTE must invest more in digital services to sustain and enhance its public service contribution in the medium to longer term and NewERA echoes this view. NewERA suggested that options regarding the use in part or whole of the RTE site in Donnybrook should be explored as a source of funds for capital investment.

RTE would agree with each of these observations and recommendations but where does all this leave us?  My predecessor, on the anniversary of 50 years of Irish television a couple of years ago, stated that this sector was at a crossroads and that policy makers had to act or much was at risk of being lost. His call was not listened to. There has been little or no action and there has, until today at least, been little serious public discussion with policy makers about what should and could be done or, indeed, what is even at risk. While I therefore very much welcome today’s discussion and hope it can lead to some real decisions and action, the question is, what decisions? There are market interventions that are worth considering.

The Department, as reported recently, appears to be looking at ways of addressing the impact of opt-out advertising and this is welcome. Any intervention that could increase investment of commercial revenues into Irish programming and the independent production sector in Ireland would be very welcome. Similarly in other markets, such as France in particular, there have been moves to introduce levies on distributors and telecommunications companies to support public funding of public service media. Changes to the must-offer-must-carry and copyright legislation, which we understand the Government is currently considering, will potentially level the playing field in negotiations between broadcasters and platforms, which should lead to much fairer compensation arrangements between them.

There is also great scope for reform of public funding. The current television licence fee system is no longer fit for purpose. Evasion currently stands at around 15% and the number of homes classified as "no TV homes" for the purposes of the television licence fee stands at around 8%. In aggregate this results in more than €50 million per year lost to public service media and, therefore, to the creative industries in this country. This is a huge loss to Irish programming and to potential jobs in the independent production sector. While RTE continues to hold the view that a household-based licence decoupled from any device, as has been introduced recently in Germany, is the most sensible solution, there are other reforms to the current system which could dramatically improve performance. These include tendering the collection agent contract, rebuilding the television licence database and removing the outdated television set exemptions. The UK, which had a very similar system to Ireland, has shown that a series of integrated reforms can lead to dramatic improvements in collection performance. Budget 2017 saw a welcome partial unwinding of direct cuts to RTE’s public funding that happened during the recessionary period. In budgets 2011 and 2014, cuts totalling €20 million were made to RTE’s funding and while €6 million was reinstated in budget 2017, which was very welcome, more is needed here. 

Any of these interventions are predicated on the assumption that policy makers believe that public service media is something worth sustaining and enhancing. I am conscious of the human difficulty for politicians in reconciling the need to increase investment in RTE, no matter how compelling the argument, and the role that RTE has in questioning, challenging and investigating all those in public life. I am conscious too that there are arguments for allocating public funding to organisations other than RTE. Notwithstanding their private ownership and commercial purposes, clearly other media organisations perform elements of public service, whether that be commercial radio stations or local and national newspapers. RTE would welcome a discussion on these issues and will argue the case for independent public media. All I ask is that we move these discussions forward. The time for endless reviews has passed.What we need now is action. 

Inaction will have far-reaching consequences for journalism, for national cultural expression and, most alarmingly, for public debate and politics. David Remnick, the editor of the New Yorker magazine, noted last week that we now live in a collapsed media structure that has caused us to live in our own silos of reality. Social media, highly commercial and market focused multi-platform news channels and the financial strain on traditional media organisations, including public service media, are eroding the very notion of a trusted public space that is impartial and balanced.  At its best, public service media provide a compelling response to the challenges and opportunities of the digital era, to the changes and challenges of fragmenting societies and to the growing public disconnection from institutions. In a world increasingly dominated by international media and content, strong indigenous public service media are essential if we are to support and preserve vibrant local cultures and distinctive identities.  We need the resources to do all of these things well and to protect all that is important.