Ms Patricia Cronin:

I thank the Chair and members of the committee for inviting us to participate in today's meeting. I hope that today's exchange will be of benefit to the committee in its understanding of funding issues regarding public sector broadcasting. I will make a brief public statement and then, following contributions from RTÉ, Ms Triona Quill and I will be available to answer questions.

There have been significant changes in the broadcasting sector in the past decade. These include the rise of digital advertising via search engines and social media, advances in content streaming services, and changes in the way people access audiovisual content. While these changes have improved the accessibility and quality of content, recent developments such as disinformation highlight the importance of trusted and reliable sources of publicly available information. Both public and private broadcasters have been impacted by these developments with the impact on advertising revenues. Share of advertising spend in the digital sector has risen from 7% in 2007 to a current figure of 40% in an environment where it is estimated that Google and Facebook obtain 75% of all digital sector advertising spend. Changing advertising trends arising both from the recession and from Brexit have resulted in a decline of approximately 35% in commercial revenues available to Irish broadcasters since 2009, with media convergence and the resultant shift to digital advertising impacting heavily upon broadcasting and print media in particular.

The decline in advertising revenue, coupled with challenges with the TV licensing collection model, such as the unacceptably high evasion rate, currently running at nearly 13%, the exclusion of 10% of households that do not have a TV and the relatively high collection costs of 7%, is having a critical impact on RTÉ's revenues and has resulted in a position where the financial sustainability of the organisation is now under immediate threat.

To address its current financial position, RTÉ has put together a revised strategy to cover the next four years that will include a number of changes to its current portfolio. These include cost reduction, further land and asset sales, increased public funding, future-proofing its offering and offering live experiences with ticketed events. In recognition of the current financial situation at RTÉ, the Minister requested that NewERA evaluate the revised RTÉ strategy with a view to assessing RTÉ's feasibility. In its report, NewERA agreed that the current financial situation at the broadcaster is unsustainable. The Department is in ongoing contact with senior management in RTÉ regarding its financial position and proposals for reform. The detail of these matters is being considered by Department officials in conjunction with NewERA officials and colleagues from the Department of Public Expenditure and Reform, and the Minister intends to bring forward a memo on the matter shortly. That has been overtaken by events this morning, which I am happy to cover.

An additional €10 million in public funding has been allocated to RTÉ over the past two budgets. This includes an additional €8.6 million made available in budget 2019 through a combination of an increase in Exchequer funding for public service broadcasting, which replaced TG4's TV licence funding, and an increase in the amount paid by the Department of Employment Affairs and Social Protection for free TV licences. This builds on the increase in funding for public service broadcasting in 2018, funded through a €1.64 million increase in the Department of Employment Affairs and Social Protection's contribution for free TV licences. TG4 was allocated an additional €443,000 in Exchequer funding for 2019 in addition to the €2 million in current and capital funding that it received in 2018, bringing the total increase since the start of the five-year review period to almost €2.5 million. TG4 was also allocated a once-off capital grant of €985,000 in 2018 for its expenditure relating to Bliain na Gaeilge.

The increased contribution from the Department of Employment Affairs and Social Protection in both 2018 and 2019 also benefits An Post and the broadcasting fund. The broadcasting fund is a fund administered by the Broadcasting Authority of Ireland, BAI, that includes the sound and vision scheme, which supports high-quality programming on Irish culture, heritage and experience, programmes to improve adult literacy, and archiving schemes. It benefits the broadcasting sector as a whole, including independent production.

In its report published in November 2017, the Joint Committee on Communications, Climate Action and Environment recommended that Revenue collect the TV licence and the replacement of the current TV licence with a broadcasting charge. In response, the working group on the future funding of public service broadcasting was set up by a Government decision in July 2018 to examine options for the future funding of broadcasting. The key recommendations of its report are that the TV licence be put out to public tender as soon as the enabling legislation, the Broadcasting (Amendment) Bill, is enacted. It will be necessary to offer a fixed term contract of five years to make it feasible for the successful tenderer to invest in the database and collection improvements. Another recommendation is that at the end of the contract period, the licence fee should be replaced by a device-independent charge to support public service content on a sustainable basis. It was felt by the group that due to a number of issues surrounding the implementation of a device-independent charge, including owner-occupier liability, how to charge commercial premises, perception issues around collecting with the local property tax, and how the charge would be collected from social and local authority housing, an interim measure was needed to address the issue immediately. The Government has accepted the working group’s recommendations and is bringing forward an amendment to the Broadcasting Act that will enable the collection of the TV licence to be put out to public tender.

On 18 July 2019, the Government approved the publication of the Broadcasting (Amendment) Bill 2019 and tabled an amendment on Committee Stage to appoint an agent through a public procurement competition for the collection of the TV licence fee. The proposed amendments to the Broadcasting Act 2009 will allow for the Broadcasting Authority of Ireland to be part funded up to a maximum of 50% from TV licence receipts. It is intended that any consequent reductions in broadcasting levy contributions would be applied across the board by the BAI so that all broadcasters would benefit in equal proportion from the measure. It is proposed that doing this will provide scope to exempt smaller community radio stations from the broadcasting levy altogether. The Bill allows for the Minister to decide what percentage of the levy to fund from TV licence receipts. It will allow the BAI to accrue a level of working capital to meet its day-to-day expenses without the need to pursue a costly and burdensome borrowing facility and grant authority to the BAI to determine exemptions and deferrals to the levy depending on the qualifying income of individual broadcasters and the level of regulation they require.

It will give the BAI greater flexibility regarding which broadcasters are covered by the levy and to what extent. This will create a legislative environment by which new broadcasters, including, for example, any that might wish to relocate to the State after Brexit, can be levied appropriately, thereby contributing to the cost of their regulation. A number of broadcasters have relocated EU services to Ireland already in light of Brexit, the main ones being Sports Information Services, SIS, and SSBL which operates FreeSports. The BAI has licensed four section 71 contracts in the past ten months. The BAI remains in contact with a number of large UK-based broadcasters which are considering relocating to Ireland if a no-deal Brexit materialises.

The Bill also addresses a gap in the existing legislation whereby the holder of the section 70 contract is exempted from the requirement to apply for a licence for any additional services it chooses to offer. It seeks to ensure that any new services could not operate on an unregulated basis and clarifies that they would require a section 71 licence.

In order to further support community and local radio, the Bill will allow for the creation of a new funding scheme that would permit the granting of bursaries to journalists in these stations, which are the starting point for many journalists’ careers. It is intended that approximately €500,000 would be made available by the BAI to support 20 annual bursaries of €25,000 each.

The Bill repeals sections 103 and 251 of the Copyright and Related Rights Act 2000 as the public policy objectives for which they were introduced, mainly to support the roll-out of cable television services in Ireland, have been achieved. In addition, television services are now available over a wider range of platforms, including satellite, which do not benefit from a similar exemption. The proposed repeals have been agreed with the Minister for Business, Enterprise and Innovation.

The Bill went through Second Stage in the Dáil on 21 October and is expected to be brought to Committee Stage in the new year.

I hope that this has helped the committee in its consideration of these issues. Along with my colleague, Ms Quill, I look forward to answering any questions members may have.