Oireachtas Joint and Select Committees
Thursday, 26 March 2015
Committee of Inquiry into the Banking Crisis
Context Phase
Ciarán Lynch (Cork South Central, Labour)
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As we have a quorum, the committee is now in public session. Session 1 this morning is a public hearing with Mr. Michael Doorly, former financial director of Independent News and Media, and Mr. Gerry O'Regan, former editor of the Irish Independent, on the role of the media in the lead into the banking crisis in the period from 2002 to 2007. I welcome everyone to the 17th public hearing of the Joint Committee of Inquiry into the Banking Crisis.
During our sessions this week we are hearing from a number of witnesses on the role of the media during the property boom in the lead-in to the banking crisis 2002 to 2007 and any changes in approach after the crisis. At our first session this morning we will hear from Mr. Michael Doorly, former finance director of Independent News and Media, and Mr. Gerry O'Regan, former editor of the Irish Independent. Specifically, Mr. Regan and Mr. Doorly have been invited to discuss the independence of editorial policy on the economy and property boom and, separately, their newspapers' business model and sources of revenue including that from the real estate sector in the period from 2002 to 2007.
Mr. Doorly is the company secretary of Independent News and Media plc. He is an experienced senior executive in the group and has held a variety of senior management roles in the subsidiary Independent Newspapers (Ireland) Limited, including that of sales and marketing director, finance director and operations director. He has also travelled extensively with the group to New Zealand, South Africa and the UK. Mr. Gerry O'Regan was editor of the Irish Independentfor seven years from 2005 to 2012. Prior to that he was editor of The Heraldand the Irish Daily Starfor periods of six years and five years respectively. Before that he was deputy editor of the Irish Independentand held various other editorial positions on the newspaper. Mr. Doorly and Mr. O'Regan are welcome before the inquiry.
Before I begin I wish to advise the witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the Chairman to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and as they have been informed previously, the committee is asking witnesses to refrain from discussing named individuals in this phase of the inquiry.
Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. In whatever sequence they wish, I invite Mr. Doorly and Mr. O'Regan to make their opening comments.
Mr. Gerry O'Regan:
I thank the Chairman and members of the committee for inviting us. As the Chairman outlined, I was editor of theIrish Independentfor a period of seven years from 2005 to 2012, and I was previously editor of The Heraldand the Irish Daily Starfor a total of 11 years.
I am qualified to discuss the editorial policy of the newspaper during my period as editor, rather than matters such as advertising revenue streams. The established policy and practice of strict separation of the editorial and advertising functions meant I was solely responsible for editorial direction. Under line management systems, other executives were accountable for commercial activities such as advertising. Correspondence on behalf of the committee states it wishes to specifically discuss "editorial policy on the economy and the property boom (2002-2007)".
By way of background and context, I think it should be noted that the overall role of an independent media in a free society is both complicated and nuanced, depending on events and circumstances. However, my essential point in relation to editorial policy, particularly with regard to economic coverage, is that there was no conscious attempt on my part, or on the part of the newspaper, to fuel what has been described as the property boom. It would be wrong, I think, to retrospectively arrive at definitive conclusions regarding the coverage of the economy and the property market on the basis of subsequent events and evidence which was not then but is now in the public domain.
The ever-changing dynamic which is a mass-selling daily newspaper requires sophisticated analysis when it comes to assessing editorial coverage on a particular issue. As the biggest-selling daily newspaper in the country, the Irish Independenthas a wide and multilayered readership base. These demographics, by definition, continue to evolve. The primary objective of an editor is to try to cater for such readership requirements by marrying statistical data and social trends with editorial instinct. The roadmap for editing, therefore, by definition, remains constantly subject to change, depending on changing events.
Coverage of the economy and related matters, such as the property market, is a key part of the journalistic remit of a paper like the Irish Independent. However, such coverage cannot be conducted in an intellectual vacuum, and editors, writers, contributors and analysts cannot but be influenced by the prevailing climate at a given point in time. Certainly, up to and including 2007, the overwhelming consensus both domestically and abroad was that Ireland had transformed itself economically. The country had by then enjoyed a number of years of unparalleled prosperity, manifest most of all in historically low unemployment rates and a period of net immigration for the first time in the history of the State.
It is important to give cognisance to the economic context and background in which media reporting and commentary we are now discussing took place. It was obviously done within the parameters of knowledge at that particular point in time. Certain objective data statistics and facts have to be taken into account when we look back at the period we are now reassessing. The facts show the economy grew strongly from 2002 and this continued in 2007. National debt was among the lowest in the developed world at 25% of GDP. The country's fiscal performance was outstanding and employment levels were at heights never seen before in Ireland. All of these factors led to a powerful so-called "national feel-good factor''. Ongoing reporting and analysis of economic and related matters continued against this background. Central to some of the arguments being considered by the committee is that editorial work had to be carried out within the framework of known events and facts at that particular time.
The overwhelming consensus was that, despite the rapid growth of the construction industry and the ongoing rise in house prices, the essential pillars of our economy were sound. The prevailing wisdom was that if a property bubble was to emerge, the country's still high employment figures and positive Government finances would mitigate against a serious economic downturn. Hence the widespread belief in the financial, economic and political communities that a ''soft landing'' would result from the rapid expansion of the property and construction sectors over the previous number of years. It is important to note also that this was the prevailing economic consensus abroad, particularly at EU level, and the approach to Irish fiscal and economic strategies by various reputable international organisations could be described as removed and benign, seemingly on the presumption that the fundamentals of our economy were sound.
As we now know, however, and as has so often happened in similar circumstances throughout economic history, underlying trends were gathering pace which would have serious negative implications for Ireland. Clouds were gathering in the international financial world and the storm that erupted in 2008 led to a global financial crisis, which had profound economic and fiscal consequences for the economies of both the USA and Europe, and particularly for those on the periphery of things, such as Ireland. In time, such developments would have profound consequences, particularly for our own banking structure.
The consequences for the Irish economy have been well documented, but for the period I have been asked to comment on, 2002 to 2007, the full import of a changing economic landscape worldwide was still in the future, and, as such, could not completely inform editorial coverage in the newspaper. My predominant objective as editor was to optimise the circulation of the Irish Independent. By definition, in an intensely competitive environment, this meant embracing and encouraging wide-ranging and diverse views in its editorial content. Daily newspapers articulate and reflect various dimensions of what has been described as "the national conversation" at any particular point in time. Sometimes, of course, the predictions and assertions by some commentators about possible future trends may prove to be incorrect, but that really is intrinsic to the very essence of journalism, including economic forecasting.
The ultimate safety valve for the maintenance of editorial standards in a newspaper is the perception and understanding of its readers. They can be influenced in making the ultimate choice, and it is a very grim choice for any editor - they can decide to stop buying the paper - if they believe certain editorial standards are not being met. For all media, including newspapers, the consumer is the ultimate judge and jury. For this and other reasons, which I hope will emerge in the discussion to follow, there was no hidden agenda in the Irish Independent to try to artificially bolster the property market for the period under review.
Ciarán Lynch (Cork South Central, Labour)
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Thank you. I call Mr. Michael Doorly.
Mr. Michael Doorly:
Good morning to the Chairman and the members of the committee. During the period which is the subject of the committee's inquiry, I was finance director of Independent Newspapers Ireland Limited, which is the Irish subsidiary of Independent News and Media plc. At the outset I would like to briefly address the subject of the role of the media from a commercial perspective. It is generally accepted that one of the lynchpins of a democratic society is a free press which operates on an independent basis. It follows that, in order to establish and maintain independence, media enterprises must be financially sustainable and capable of survival in a commercial and competitive environment. In seeking to achieve this, the print media has two core sources of income: these are revenue from the sales of its publications and revenues from advertising. Both income streams are vital and there is an interdependence between them.
The reality, of course, is that the publication is the core product which, through the quality of its content and its success in building circulation, sales and readership, creates a channel for advertisers to promote their goods and services. Advertising revenues are, therefore, a factor of the reputation and integrity of a publication, which is built through good reporting and good journalism, and content that is relevant to its readership. The requirement to maintain and build on this editorial integrity underpins Independent News and Media's policy of a strict and absolute separation of the editorial and commercial functions within the organisation.
The committee of inquiry has requested me to address a number of matters, including the company's business model and sources of revenue, including revenue from the real estate sector. They have asked me to address the importance of property-related revenues within the overall revenue mix, the group's engagement in property-related commercial activity and the relationship between the editorial and sales functions.
The committee will understand that the company, as a commercial organisation operating in a highly competitive industry, is not in a position to disclose detailed financial figures that would be of potential benefit, and certainly of interest, to our competitors. However, I will attempt to deal with the issues in a manner that provides the committee with substantive information which will meet its requirements.
Referring to the business model, Independent News and Media is the largest media operation on the island of Ireland. It is also a public limited company. The group has a strong portfolio of national, regional and local print titles, including the Irish Independent, which is the market leader among the dailies, and the Sunday Independent, Ireland’s biggest-selling Sunday newspaper. The production and distribution of newspapers is a complex operation, but in the business sense it is quite simple: we sell newspapers and we sell advertising.
Referring to sources of income, newspaper revenues are derived from two sources: circulation sales and advertising revenues. Between 2002 and 2007 Ireland was a country in the throes of a major economic boom. GDP grew strongly in each of those years and newspaper sales and advertising revenues enjoyed increases broadly in line with the economy. Over the period, the revenues of the Irish Independentand the Sunday Independentincreased by an average of 6.5% per annum. This is a total of 37.6%. I wish to correct the figure of 31.7% presented in my written submission. Advertising revenues increased by an average of 9% per annum, or 52% over the period. Circulation sales increased by an average of 3% per annum, or 17% during the period. This is not surprising in an economy in which personal consumption was growing at an average rate of almost 5% a year.
In terms of the revenue mix, in 2002, 60% of overall revenues came from advertising, with the remaining 40% coming from circulation. By 2007, 66% of overall revenues came from advertising, with 34% coming from circulation. This movement is not insignificant, but neither could it be described as a paradigm shift.
Referring to the importance of property-related advertising in the overall revenue mix, it is clear that the demand for advertising space to promote housing developments increased throughout the period under review. The increase was in line with the scale of activity in the residential property market, where house completions increased by an average of 13% per annum, from 57,695 units in 2002 to just over 93,000 units in 2006.
From a relatively low base, property-related revenues in the Irish Independentand the Sunday Independentgrew by a similar 13% per annum, or a quantum of 89% over the period. For reference purposes, it is worth noting that advertising of travel increased by 25% per annum throughout this period, or a quantum of 153%. Revenues from property-related advertising represented an average of 14% of total advertising income and accounted for just over 9% of overall income - that is, income including both circulation sales and advertising revenues.
In his submission, my former colleague Gerry O'Regan gave an insight into the role of the media during the economic boom and subsequent crash. The only comment I will add, specifically concerning the property market, is that the media, in my view, cannot create or sustain a boom. Demand for property is created by a mix of factors over which the media have no control. These include overall economic conditions, employment levels, consumer confidence, the availability of finance, demographics, the rate of home formation, and society's capacity for risk.
In relation to information sought concerning engagement in property-related commercial activity, I can advise the committee that INM did not engage in property development activities and was at no stage a participant in the property industry. I would like to add, however, that as part of our normal operations the Irish Independentdid relocate its printing business from Abbey Street in Dublin city centre to Citywest in Dublin 24 and relocated its publishing division to Talbot Street in Dublin 1 in 2004. This was in line with other publishers in moving printing facilities out of what were congested city centre areas.
With reference to the relationship between the editorial and sales functions, Mr. O'Regan and I have outlined the position concerning the complete separation of the editorial and commercial functions within our organisation. I thank the Chairman and I hope my comments are of assistance to the committee.
Ciarán Lynch (Cork South Central, Labour)
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I thank Mr. Doorly and Mr. O'Regan for their opening statements. Before calling the questioners, I might address two issues with each of the witnesses.
In his opening statement, Mr. Doorly described the link between the quality of the publication and its journalism and its ability to gain circulation and readership, with this in turn translating into the ability to attract advertising. So there is a sort of circular motion there. However, in his presentation he stressed "the strict and absolute separation of the editorial and commercial functions." How did this work in practice?
Mr. Michael Doorly:
Absolutely. The reality is that our business is built around the product, and in this case the success of the product, the Irish Independent, is dependent on good reporting, on good journalism and on presenting content that is relevant to its readership. The paper comes first, and through its success, which is measured in terms of circulation, sales and readership numbers, it does create a platform for advertisers to target their audience and promote their goods and services. The balance that the Chairman referred to is therefore weighted towards the newspaper, and this is the domain of the editor and is separate from the commercial functions. In practice, the editor will hold daily conferences to review the news agenda and the make-up of the paper; there is no commercial representation at those sessions. It is the domain of the editor and it is separate from the commercial functions.
Ciarán Lynch (Cork South Central, Labour)
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I have a question for Mr. O'Regan on a similar theme. In his opening statement he said there was no conscious attempt by him, as editor, or on the part of the Irish Independentto fuel the property boom. What were the main factors at play in the newspaper? Regarding media coverage of the Irish property boom during the crisis period of 2002 to 2007, how would he describe the narrative that was being portrayed in the media at that time?
Mr. Gerry O'Regan:
As I said in my opening statement - I think I speak for anybody who has ever edited a newspaper - my predominant fixation was optimising the sales of the paper. Newspapers, obviously, reflect the ever-changing panorama which is human life. During some years when I was there, obviously, the property boom and economic growth and the subsequent economic collapse were key issues which we needed to cover. We covered them and tried to reflect them, as I said, with the ultimate and primary objective of optimising sales, in the same way as we would cover the drama, the changes, the ups and downs, the victories and defeats in areas such as sport, politics, economics in this case, and the changing lifestyle patterns in the country. We were trying to hold a mirror up to Irish life.
Ciarán Lynch (Cork South Central, Labour)
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I think Bill Shankly once said that sport was more important than life or something like that.
Ciarán Lynch (Cork South Central, Labour)
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Exactly.
Ciarán Lynch (Cork South Central, Labour)
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We dealt with this issue with representatives of the Irish Examineryesterday afternoon, and it will also come up with the other media representatives. During the period, there was a view that people felt they had to get on to the property ladder as quickly as possible because of escalating prices. This was creating a self-fulfilling prophesy in that it was driving up prices because it was increasing demand with the inevitable fear that "If don't get in this year, I won't be able to get in next year." What was the Irish Independent's reportage of that phenomenon, or was there such reportage?
Mr. Gerry O'Regan:
The actual inclination of people to want to get on the property ladder has always been there, for a number of decades.
It has not gone away and is still there. What I was conscious of particularly when I started editing the Irish Independentwas to try to broaden its overall economic coverage. I was appointed editor on 28 September 2005 and within a few weeks I met a man for lunch whose name has already come up repeatedly here at the committee meetings, Mr. David McWilliams. I signed him up to write for the Irish Independentwhen I was ten weeks into the job. He joined on 22 December, we both went off and enjoyed our Christmases and he started to write everything that he saw fit from early in 2006. I have a number of key extracts here where his prognostications of the doom which was to come have been proved very much correct by what happened.
I recruited David McWilliams for two reasons, one of which was as part of an ongoing process to widen our economics coverage. We had an excellent economics editor in Brendan Keenan. I have an interesting aside to which I can speak later which was Brendan's response to that other man who has been repeatedly mentioned in relation to the downturn, Morgan Kelly. That and a number of other key extracts show that the Irish Independentwas willing and trying to embrace what was now a widening discussion about possible perils on the horizon. The records in the Irish Independentat that time prove that was the case.
Susan O'Keeffe (Labour)
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Mr. Doorly and Mr. O'Regan are welcome. I follow up Mr. O'Regan's remark about Mr. Morgan Kelly. I am not entirely clear what he was saying there. We understand from yesterday's evidence from Dr. Mercille that Morgan Kelly had at least one newspaper turn down his second article for publication, the first one that went to The Irish Timesin 2006, and that a second article was also turned down. Is Mr. O'Regan referring to that?
Mr. Gerry O'Regan:
I am unaware of that. If Morgan Kelly had approached me with what I would describe not as a dissenting view but as an alternative view on our economic scenario, I would most certainly have given him a run. What I am saying is so as to dispel any suspicion or inclination that the Irish Independenthad a conflict with embracing an - I am uneasy about using the word "dissenting" - alternative, wider view of our possible economic scenario at the time. I have an extract from the newspaper edition of 4 July 2007 when Brendan Keenan was responding to the statements made by Morgan Kelly. He wrote in the context of an ESRI survey:
Actually, there is a bigger danger; that the property market - rather than having a soft landing or a bumpy landing - crashes and burns. This was the scenario outlined in the ESRI quarterly bulletin by UCD economist Morgan Kelly.Although it was contained in the bulletin, it was not part of the ESRI forecast. That predicts a soft landing, with house building falling 10pc over the 18 months, and house prices stabilising after a 3pc fall this year. Prof Kelly takes a different view. Based on property booms and busts in different countries over the past 40 years, an Irish crash could knock up to 60pc off the real (after inflation) price of houses over the next 10 years, he says. The first thing to be said about Prof Kelly's scenario is that it could happen.
In other words, it could lead to a massive property crash. Brendan Keenan, as economics editor of the Irish Independent, continued, "Anyone who says it is impossible is whistling past the graveyard, or a downright fibber." I use that as a case in point that the paper was more than willing to embrace contrarian views.
Susan O'Keeffe (Labour)
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What is the date of that article?
Susan O'Keeffe (Labour)
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In 2011, Vanity Fairreported that Morgan Kelly had been turned down by the editor of the Irish Independentwho had said the article that was sent to him was offensive. Is Mr. O'Regan saying that never happened?
Susan O'Keeffe (Labour)
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That article subsequently appeared in The Irish Timeslater in September. I thank Mr. O'Regan for the clarification in relation to Brendan Keenan. In the final sentence of his opening remarks, Mr. O'Regan said "there was no hidden agenda in the Irish Independent to try to artificially bolster the property market for the period under review". How would he describe what the paper was doing? Was it bolstering it in any shape or form? Even if one takes out the word "artificially", was the paper encouraging, supporting or doing anything at all given that Mr. O'Regan said he had to reflect life as it was and that any editor would want to do that.
Mr. Gerry O'Regan:
The central point in that argument is that in the light of subsequent events, one can retrospectively draw conclusions. In fact, the essential point I was making in my submission was that newspapers and the human condition can only make judgments and continue on making statements in light of what is known at a particular time. The debate on our economy is ever-changing. There is a new emphasis almost by the day and certainly by the month in light of a changing scenario internationally and domestically. It would be as if the paper tomorrow carried economic predictions for the next year. They will often vary in the context of the writer or economist who is making the judgment. People come to these things with their own prejudices, presuppositions, blinkered approaches or whatever it is. Often, one has to wait for events to happen to find out who was right and who was wrong.
Susan O'Keeffe (Labour)
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Was Mr. O'Regan just doing his job? What I am trying to get at is whether his newspaper or INM Group newspapers contributed to the feeling that it was a safe bet and a good thing to buy property and that this was good for Ireland incorporated. What role did they play?
Mr. Gerry O'Regan:
I think retrospectively that some of our contributors were of the view that it was a good time to buy property at a particular point in time over those years. It would be the same as asking someone today if he or she thought house prices will go up or down in Dublin and whether one should buy now or wait for a year. He or she could be right or wrong. The essential point I am making is that we were trying to cover all possibilities and going back to my other assumption, which was that I was trying to sell the newspaper. For example, I recruited David McWilliams with that express purpose in mind. On 22 March 2006 when I had been in the job three or four months, we put across the top of page 1 of the Irish Independentthat David McWilliams was writing inside about Ireland's love affair with borrowing, saying our economy could turn from a crock of gold to a complete crock unless we checked this credit craze. He wrote "If the property boom goes pear shaped - and they tend to do so - not only will our feelings of prosperity evaporate, our European credentials might go too". On 26 April, he wrote that our economy's over reliance on the construction sector would expose us to a hard landing if there was a slump, stating "much of [our] employment is coming from the construction sector. In fact, take construction and its attendant industries out of the equation and there is not much vibrancy [t]here". He asked if people would ask if they did not see a slump coming, that is, an end to this artificial boosting of the economy.
Susan O'Keeffe (Labour)
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We understand that Mr. McWilliams had diverse views, many of which were published in Mr. O'Regan's paper. Has Mr. O'Regan looked back to see the following?
If one could call him a contrarian and the others cheerleaders - I am just using the words in the broadest sense - would Mr. O'Regan have said his newspaper and the newspapers in the group had more cheerleaders or more contrarians?
Susan O'Keeffe (Labour)
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Mr. O'Regan was making money out of it, as we have heard from Mr. Doorly. I am not asking about revenue; I am just asking whether the newspaper had a balanced approach or whether Mr. McWilliams was the one contrarian while the rest of the newspaper was encouraging and supporting the property market, development, investment and the purchase of property.
Mr. Gerry O'Regan:
If Senator O'Keeffe will bear with me for one minute, I will read out another piece. The only way to make this argument is by taking selective articles that show that we had people who could be taken as being in favour of a growing construction industry. There are previous excerpts from the committee in which this was done.
Susan O'Keeffe (Labour)
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I am asking Mr. O'Regan in the round. I am not giving him any specifics. I am asking, in the round, would Mr. O'Regan say, if he looks back at his time in office as editor of that paper and the period before, which was also relevant, did the newspaper offer more on one side or the other about the property-----
Susan O'Keeffe (Labour)
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I am not asking Mr. O'Regan whether he should or should not have; I am simply asking whether he did or did not. If he looks back, did he give more space to-----
Mr. Gerry O'Regan:
I do not think one can use the word "more". The definition of that word, retrospectively, is very difficult to diagnose. What I would say is that I am happy that I gave proportionate coverage to the Irish economy in light of its evolution and its changing dynamics over that period.
Susan O'Keeffe (Labour)
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Part of our debate here is about the nexus between politicians, property and the banks. I wanted to look at the decision taken by the papers back in April 2007 to back the Government in the forthcoming general election. How does Mr. O'Regan account for the change in the newspapers at the time? Until then, the headlines for the incumbent Government had been pretty unpleasant, and then there was a sea change in April 2007 in support of the then Government in the election later than year.
Susan O'Keeffe (Labour)
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Mr. O'Regan was-----
Susan O'Keeffe (Labour)
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I am asking Mr. O'Regan what happened at the newspaper at that time that allowed such a sea change, where there had been little support for the incumbent Government and then suddenly there was a big change. In fact, The Observerreported on 22 April 2007 that Independent News & Media would swing behind the Government: "all three of [the] main national titles - the Irish Independent, the Sunday Independent and the Evening Herald - will back Ahern to get re-elected." How did that story unfold?
Susan O'Keeffe (Labour)
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Were those decisions based at all on private meetings that we understand took place between senior members of the Government and senior members of INM?
Susan O'Keeffe (Labour)
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That never happened?
Mr. Gerry O'Regan:
I can categorically say that during my time editing the Irish Independent, I never got any direction whatsoever of that ilk on any occasion. We certainly met various people. We met various politicians, economists and business people, but at the end of the day I was given freedom to edit the paper. My predominant objective was trying to sell it.
Susan O'Keeffe (Labour)
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One of the key members of the Irish Independent's editorial staff said that such meetings had taken place. I am not saying that Mr. O'Regan was present at those meetings, but this person said that senior members of the paper were at meetings with senior Government members. I am asking whether or not-----
Susan O'Keeffe (Labour)
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The meetings that changed the approach?
Susan O'Keeffe (Labour)
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Did those meetings take place?
Susan O'Keeffe (Labour)
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But Mr. O'Regan received no direction to change-----
Mr. Gerry O'Regan:
I want to be absolutely clear that we met various people from various walks of life who gave their views, or we gave their views, or it was off-the-record briefings or whatever. At the end of the day, I came under no influence whatsoever to support any political party or to make any decisions about any of the election-----
Susan O'Keeffe (Labour)
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Mr. O'Regan received no direction to do so?
Susan O'Keeffe (Labour)
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I thank Mr. O'Regan. Mr. Doorly said in his opening statement that INM was not a participant in the property industry. When the INM group bought www.propertynews.comin 2006, the chief executive of INM said, "The combination of PropertyNews.com and INM's online and newspaper operations will allow the group to offer estate agents and home owners an unrivalled package." What was the signal to the world if INM was now buying into a property website which was of course promoting the sale of property? What was the signal-----
Ciarán Lynch (Cork South Central, Labour)
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The Senator may ask a supplementary question of Mr. Doorly.
Mr. Michael Doorly:
Independent News & Media started off as a traditional newspaper business and over time the company expanded both in Ireland and overseas. It was investing in Australia, New Zealand, South Africa and the UK. The natural progression was to diversify out of just newspapers, and it started to diversify into radio, outdoor advertising and new media. In terms of new media and some structural changes that were beginning to take place in the market, the group was developing a strategy of involving itself in developing websites in news, business and sport, but also classified advertising. It was part of its strategy on new media. At the time it was called "new media"; it is now called digital or online content and it is normal enough. The company was investing in classified advertisement sites, including sites for recruitment, motors, property and travel. It is in the context of that structural change, moving from a dependence on newspapers alone into new media, that that purchase was made. That purchase was made in the Republic of Ireland by the UK subsidiary. It was a Northern Ireland business and, at the time, according to the same article, it had 20,000 properties, 4,000 of which were in Border counties in the Republic. It was a Northern Ireland play in property. The hope was to move into the Republic, which is what we are doing now. We have our newspaper business and our digital business and we have other streams of income.
Ciarán Lynch (Cork South Central, Labour)
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There will be only one supplementary on this, if Senator O'Keeffe wishes.
Susan O'Keeffe (Labour)
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To be clear, it was buying into a part of the property business at the time, was it not? No? I do not understand.
Mr. Michael Doorly:
No. In isolation one can see it that way, but the reality was that it was part of a strategy to reduce our dependence on newspapers, which in the normal product life cycle are at a very mature stage, to say the least, and to move into new media. That is why that purchase was made, and that is the context of the purchase. It was the move by INM into digital.
Susan O'Keeffe (Labour)
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It was a business deal.
Michael McGrath (Cork South Central, Fianna Fail)
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I welcome Mr. Doorly and Mr. O'Regan and thank them for coming. I will start with Mr. Doorly and will ask him to clarify the number of newspaper titles that INM had in Ireland during the years in question.
Michael McGrath (Cork South Central, Fianna Fail)
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Can Mr. Doorly remind us, with regard to commercial and residential property, what supplements there were with the daily Irish Independentand the Sunday Independent, and on what days of the week?
Mr. Michael Doorly:
The Irish Independent had two property-related supplements. It had a commercial property supplement, which appeared once a week on a Wednesday, and it had a residential property supplement that appeared once a week on a Friday.
In addition, the Sunday Independentcarried property in addition to other forms of advertising.
Michael McGrath (Cork South Central, Fianna Fail)
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Was that a supplement?
Michael McGrath (Cork South Central, Fianna Fail)
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I will take Mr. Doorly through some of the numbers on the advertising revenue that the company benefited from that he provided in his opening remarks. I put it to him that during the period in question there certainly was growing dependence on advertising revenue, which increased from 60% of the company's revenue base to 66%. As such, the ratio of advertising revenue to circulation revenue moved from a ratio of 3:2 to 2:1. Advertising grew by approximately 52% during the period in question. Within the advertising, the property-related advertising element was growing quite rapidly. Was the business becoming increasingly dependent on revenue from property-related advertising during the period?
Mr. Michael Doorly:
I take Deputy Michael McGrath's point. It is true that throughout the period the ratio of circulation revenues to advertising revenues changed in favour of advertising and advertising revenues were growing at a faster pace than circulation revenues, but, as the Deputy may recall, the economy was flying at that time, between 2002 and 2007. It was expanding, income levels were increasing and within the Irish Independent, we were showing increases across all categories of advertising.
We need to put property into context. The most important advertising stream would be general run of paper display advertising. I guess recruitment was probably second. We had income coming in from the magazines, particularly the Sunday LIFEmagazine and the WEEKENDmagazine. We had property and motors and travel. All the categories were improving year on year. In addition, as I mentioned, the group had extended overseas. We were getting involved in radio. We were getting involved in outdoor advertising and in new media. The business was thriving and there was no undue focus or pressure on property-related advertising.
Michael McGrath (Cork South Central, Fianna Fail)
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Was it a reflection of the economy and the buoyancy of the property market that the property-related element of the company's advertising revenue increased from 11% to 17% during the five years in question?
Mr. Michael Doorly:
Yes. When one looks at the figures, circulation, sales and readership numbers tend to be very stable and advertising revenues are volatile and will rise and fall in line with consumer spending. However, those rises and falls were not just in property; they were across the board. One should look at the newspapers today. One should look at the run of paper display advertising. One should look at the number of jobs being advertised and the number of properties being advertised. These are all down. At the time, the economy was experiencing a boom and all boats were rising.
Michael McGrath (Cork South Central, Fianna Fail)
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Mr. Doorly states as well that revenue from the property advertising stream represented on average just over 9% of overall income for the years concerned. At the peak, in 2006 and 2007, to what did that rise?
Mr. Michael Doorly:
It represented 14% of advertising and 9% of overall revenues. The range in advertising was 11% to 17% and I guess the range in terms of overall revenues was 7% to 11%. It represented approximately 11% of the revenues of the Irish Independentand the Sunday Independent. That excludes the remainder of the Irish business and the international business. As a proportion of the company's revenue, it was relatively small. I do need to say there was no undue focus or pressure on advertising related revenues.
Michael McGrath (Cork South Central, Fianna Fail)
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Is Mr. Doorly saying that at its peak the property-related advertising stream of revenue was approximately 11% for the Irish Independentand the Sunday Independent?
Michael McGrath (Cork South Central, Fianna Fail)
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Would there have been a significant variation between the daily newspaper and the Sunday newspaper in terms of dependence on property-related advertising?
Mr. Michael Doorly:
There is a difference. One could take it that most of the advertising revenues that we are talking about would have appeared in the Irish Independentbecause it produced two out of the three supplements. It carried commercial supplements as well as the residential property supplement and the majority of that revenue was in the Irish Independent.
Michael McGrath (Cork South Central, Fianna Fail)
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Commercially, would the Irish Independenthave had a greater dependence on such revenue?
Michael McGrath (Cork South Central, Fianna Fail)
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Presumably, there would be internal management accounts measuring the performance of each newspaper.
Mr. Michael Doorly:
Not by title. When we talk about competition between titles, both internally and externally, the success of a title is measured almost exclusively in terms of circulation, sales and readership. It is a little like radio with listenership or television with viewership. It is all about circulation, sales and readership.
Michael McGrath (Cork South Central, Fianna Fail)
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Does Mr. O'Regan believe that national newspapers can be influential and while they may not eventually make up the readers' minds, they can be influenced by national newspapers?
Michael McGrath (Cork South Central, Fianna Fail)
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If the balance of views being given in a national newspaper, albeit reflective of the submissions being made to Mr. O'Regan and the material being submitted, is on one side of an argument rather the other, that can influence public opinion. Mr. O'Regan stated at the outset that there was no conscious effort on his part or on the part of the newspaper to fuel what has been described as the property boom, but the question I have for him is whether he believes that may have been the effect of the journalistic output from the company's newspapers even if it was not the intended effect.
Mr. Gerry O'Regan:
All media, including newspapers, affect people and influence them. Obviously, in the case of the Irish Independentduring those times, of course, I would accept the newspaper may well have influenced people in many walks of life about various issues not only on the economy, but as regards such matters as politics, lifestyle and consumer affairs. In fact, basically, I suppose one could say newspapers are divided into two broad streams of content. First, they report the events that have happened. Second, one has various writers who, one could say, by definition, are trying to influence people in the sense they are trying to persuade them that their way of thinking is the correct way.
Michael McGrath (Cork South Central, Fianna Fail)
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Does Mr. O'Regan accept, if the predominance of views on his newspapers were favourable towards the property market, were not issuing warnings and were, in effect, encouraging readers to participate in the property market, that would have had an influence on readers' behaviours?
Mr. Gerry O'Regan:
Yes, but, as I stated earlier, my own thesis - I can only really speak from the time I was editing the newspaper - is that I was conscious that, no more than in any sphere of its coverage, our economics coverage would try to be balanced. One person's idea of balance, as Deputy Michael McGrath will be aware, is another person's idea of bias. No more than in the political sphere, one would try to maintain a balance, if only, as I mentioned on a couple of occasions already, to try to make the product as interesting and as readable as possible for the consumer.
Michael McGrath (Cork South Central, Fianna Fail)
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When Mr. O'Regan published contrarian or alternative views compared to the mainstream views at the time, would he ever have had messages or signals from politicians or political sources that such publications were unwelcome or unhelpful? Was that message ever conveyed to Mr. O'Regan, directly or indirectly, from those involved in politics?
Mr. Gerry O'Regan:
No. One hears now and again, say, particularly in the political sphere, that somebody is unhappy with something but, in fairness to members of all parties, I never came under any pressure whatsoever. In the same way, in relation to our business coverage, no member of any political party ever got on to me and said that I should be doing this or that.
Michael McGrath (Cork South Central, Fianna Fail)
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Was a story ever suppressed because of commercial considerations or because it did not fit in with any overall narrative that the newspaper group was trying to convey in terms of the economy and the property market?
Michael McGrath (Cork South Central, Fianna Fail)
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Was it ever considered?
Mr. Gerry O'Regan:
No. The only reason that we held up stories was because of legal risk and threat of libel action. I cannot recall any instance whereby we did not run a story on either the economy or anything else because it would upset somebody. In the usual roundness of things, the stories that upset people are the best stories.
Michael McGrath (Cork South Central, Fianna Fail)
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At the time, was there a written policy within the company dealing with the issue of staff accepting gifts from banks, property developers and auctioneers, and also in terms of hospitality? Was there a company policy?
Mr. Gerry O'Regan:
I do not think there was a company policy. I think, as was mentioned yesterday - I looked at some of the proceedings - the broad guidelines operating in this area are the NUJ Code of Conduct and the Press Council Code of Practice. There is also the Press Ombudsman. As regards accepting gifts, I do not think there is any policy as such. I thought about this this morning. A couple of years ago, when Kerry was in the All-Ireland final and I could not get a ticket, one of the main drinks companies invited me. I probably should have rung Deputy Higgins, who is a west Kerry man like myself. He probably had some tickets that I could have accepted as a gift. I took the tickets. That kind of thing possibly does happen, but I do not know whether it actually corrupts anyone. I do not think I was corrupted by it, and I enjoyed the match. I would not have got a ticket otherwise.
Michael McGrath (Cork South Central, Fianna Fail)
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Was there ever an incident in which Mr. O'Regan or a member of staff was offered, whether it was accepted or not, a gift or hospitality from an organisation in the property sector which made him uncomfortable?
Mr. Gerry O'Regan:
No, I never heard that. I was not closely involved, but I am sure people were brought to view properties and things like that, just as journalists are brought to view new industrial locations or journalists from abroad are brought to Ireland. One is also depending on the journalist going back and writing a readable report, depending on what section of the paper it is going into.
Michael McGrath (Cork South Central, Fianna Fail)
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Was anyone ever offered a loan by a financial institution at a preferential interest rate, as far as Mr. O'Regan is aware?
Michael McGrath (Cork South Central, Fianna Fail)
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I have a final question for Mr. Doorly. Does he believe, overall, that there was an unhealthy dependance on revenue from the property sector during the boom years in question?
Mr. Michael Doorly:
No, I do not. I believe the Irish Independentwas financially sustainable, that circulation sales and readership were pretty rock solid and that advertising revenues were volatile, in that they will rise and fall in line with the economy. This was a period where revenues rose and the company did well. It was transient. We are now in a different environment, but that is the business. It rises and falls in terms of advertising revenues in line with the economy. It was no more than in line with the economy. As it has decreased or contracted, our advertising revenues have also decreased and contracted. It was no more than a normal cycle of events with rising and falling economic cycles.
Ciarán Lynch (Cork South Central, Labour)
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Would the Deputy like to ask one supplementary question?
Michael McGrath (Cork South Central, Fianna Fail)
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No.
Ciarán Lynch (Cork South Central, Labour)
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Can I just round off with some issues that Senator O'Keeffe and Deputy McGrath raised with Mr. O'Regan, before I go into general questioning? The first question I would like to ask Mr. O'Regan and Mr. Doorly is whether the owner of INM had any input into your opening statements this morning.
Ciarán Lynch (Cork South Central, Labour)
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I thank the witnesses. There is another question, maybe specifically for Mr. Doorly. It concerns the way advertising works in newspapers. Studies will show that in an upturn in the economy there is an explosion in advertising and as the economy then contracts advertising dries up very quickly. This is a dynamic that indicates that the economy is running very fast, and that speed is certainly measurable in the way advertising grows ahead of it. Have any studies been done by INM into this dynamic?
Mr. Michael Doorly:
There have been no formal studies, but obviously the board and the management team would always be aware of this volatility. As a PLC we try to eliminate that volatility and de-risk. We have, we believe, achieved this by diversifying and investing abroad, which spreads the economic risk and the exposure to cycles within each economy. That is why we were in Australia, New Zealand, South Africa and the UK. Also, dependence on newspapersper se, let alone circulation sales and advertising within them, had to be reduced. Therefore, we began to invest in those businesses that had sub-businesses in radio, outdoor advertising and new media. We have always been conscious of the need to de-risk and reduce our dependence on any one income stream.
Ciarán Lynch (Cork South Central, Labour)
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It is the most significant new agency on this island. The reason I am asking this question - I am sure other members might digress into areas that are related to this - is that if the average house price is running several multiples ahead of the national wage, that is an indication that there is something happening in the property market that needs to be dealt with. If advertising is running so fast in media - if the advertising figures are so off the mark compared to the situation two or three years previously - does the question then get asked in the media as to what is actually going on here?
Mr. Michael Doorly:
Yes, and at the moment we are looking to see what is going to happen over the coming months. It has been difficult over the past number of years, but theIrish Independent has now turned a corner. I think it has been widely reported that for the first time in 2014 we have increased our revenue base and we are now showing improved profitability. Could the Chairman repeat the question?
Ciarán Lynch (Cork South Central, Labour)
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I refer to the speed at which advertising is growing, which is reflective of something that might be happening in the wider economy. Does that not raise a kind of environmental question?
Ciarán Lynch (Cork South Central, Labour)
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Mr. O'Regan made a statement in response to a question from Senator O'Keeffe that I would like him to clarify. He said he had arrived at a political conclusion. Was it an editorial position that he would then favour one political party over another? Maybe he could expand on what he actually meant by that.
Ciarán Lynch (Cork South Central, Labour)
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Maybe Mr. O'Regan could talk us through that process. We are used to other jurisdictions, which were mentioned yesterday - the UK in particular - where newspapers are associated with particular political entities. In the United States it is even more unbraked, for want of a better term. That is not really something that has historically been seen in the Irish context. How does one arrive at a political position that this is what the editorial position of a newspaper is going to bevis-à-visa certain political party?
Mr. Gerry O'Regan:
I think, again, it is probably instinctive judgment, and it is obviously, to an extent, subjective. Obviously one would discuss it with other people on the editorial team, and there is a feeling that would evolve, perhaps, or an instinct would emerge. I suppose one of the key reasons would be economic issues and what we feel would be best for the country. The Irish Independent would be, broadly speaking, a centrist newspaper, but it is certainly pro-enterprise and pro improving the economy because it improves things for everybody - the country at large, the media and newspapers.
Michael D'Arcy (Fine Gael)
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Mr. Doorly used the phrase "no more than the normal cycle of events." Could he expand upon that, please?
Mr. Michael Doorly:
The core business is the product. In this instance the product is the Irish Independentand its success is built on good reporting, good journalism and providing content that is relevant to the readers. That is the business. The success of the title is measured in terms of circulation sales and readership. What happens then is that the advertisers looking for channels to promote their goods and services will review the numbers and will or will not advertise, as appropriate. The circulation and readership figures, as I said, are quite stable. It is the advertising element that will rise and fall in line with the economy.
Michael D'Arcy (Fine Gael)
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Mr. Doorly made the point that the company tried to expand into different sectors and different jurisdictions.
Michael D'Arcy (Fine Gael)
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That is understandable.
Michael D'Arcy (Fine Gael)
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Was the group heavily indebted?
Michael D'Arcy (Fine Gael)
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Was there debt with Irish banks?
Michael D'Arcy (Fine Gael)
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Does Mr. Doorly have a ratio of what the debt was with Irish banks versus external banks?
Michael D'Arcy (Fine Gael)
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One third Irish.
Mr. Michael Doorly:
That information is available. It would be published in our annual report - the number of banks that were supporting the company. At the end of 2012, or at the start of 2013, the company had a debt in excess of €400 million. The list of banks would be in our annual report which is available. I could forward it to the Deputy if he wishes to have a copy.
Michael D'Arcy (Fine Gael)
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Please. There was subsequently a substantial write-down.
Michael D'Arcy (Fine Gael)
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Would that not be a-----
Mr. Michael Doorly:
There were a number of elements to that. It was quite complex. The first element was that the company had to dispose of its asset in South Africa, the company had to restructure its defined benefit pension plan and the company had to raise finance from its shareholders. That happened in 2013 and reduced the debt by €300,000.
Michael D'Arcy (Fine Gael)
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Does Mr. Doorly mean €300 million?
Michael D'Arcy (Fine Gael)
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Would those events not be outside of the normal cycle of events?
Mr. Michael Doorly:
Again, talking about the business and the business in Ireland, and the Irish Independentand Sunday Independent, we are talking about the Irish operation. Throughout all of this, and throughout the debt issue, and throughout the restructuring, the Irish business continued to be profitable and is so to this day. It continued its normal cycle of business. Yes, at a balance sheet level outside of the operation there were credit issues. With the credit crunch the company was unable to extend its facilities. That is what caused the problem.
Michael D'Arcy (Fine Gael)
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Was there a drag on the Irish finances to subsequently underwrite those areas where there was external loss-making?
Mr. Michael Doorly:
No. The debt, to be clear, was €400 million at the start of 2013. That was dealt with through the disposal of assets, the restructuring of the pension plan, the bank write-down and raising cash from our shareholders. Indirectly, the staff did suffer with a reduction in their pension.
Michael D'Arcy (Fine Gael)
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I have two minutes which is not a lot of time to ask Mr. O'Regan many questions. He came prepared and brought some examples with him of where the paper was correct in its outlook or forecast. Has he brought examples of where the paper was incorrect in its outlook?
Michael D'Arcy (Fine Gael)
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Can I give my example?
Michael D'Arcy (Fine Gael)
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I shall refer to a Sunday Independentsection. I know Mr. O'Regan was not its editor but he is the editor from the group who is here today.
Michael D'Arcy (Fine Gael)
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I am asking for Mr. O'Regan's opinion as an experienced editor, if he will allow me please. I am speaking about the stewardship of a financial institution. The article reads: "Sure, he needs more heavyweights on the board. Sure, he has been overzealous in his pursuit of defaulters." I am sure the Chairman will be happy to know that I shall not name anybody. The article continued, "Sure, he earns an awful lot of money. Sure, he has been less than transparent."
Ciarán Lynch (Cork South Central, Labour)
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Can the Senator give us the date of the article?
Michael D'Arcy (Fine Gael)
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It was 27 April 2003.
Ciarán Lynch (Cork South Central, Labour)
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I thank the Senator.
Michael D'Arcy (Fine Gael)
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I shall continue to leave the gentleman's name out. The article continued, "But ...., for all his faults, he has delivered...."
Ciarán Lynch (Cork South Central, Labour)
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The Senator has gone well over his time.
Michael D'Arcy (Fine Gael)
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The article continues, "But ...., for all his faults has delivered the only thing that matters in business: profit." What is Mr. O'Regan's editorial opinion on such statements, please?
Michael D'Arcy (Fine Gael)
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Then I am asking Mr. O'Regan about the Everton back four, please.
Mr. Gerry O'Regan:
I would not comment because I have no knowledge of that piece. I do not know who wrote it. I do not know the context. I do not know why it was commissioned. I do not know if it was part of a totality of coverage on the given day. It would be unfair to everybody for me to comment on it. I simply do not know about it.
Ciarán Lynch (Cork South Central, Labour)
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I call Deputy Eoghan Murphy and he has six minutes.
Eoghan Murphy (Dublin South East, Fine Gael)
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I thank the Chairman and both witnesses. I want confirmation of something that has arisen from earlier questioning. Was Mr. O'Regan ever contacted by a senior Government member or representative to complain about an article or series of articles that were carried in his newspaper?
Mr. Gerry O'Regan:
I have no memory of anybody senior of that ilk. I would meet politicians socially and sometimes they would be happy but sometimes they would be unhappy. That is a fact of the normal interaction between media and politics. I never got any, if one likes, complaint of import, shall we say, formally in that sense.
Eoghan Murphy (Dublin South East, Fine Gael)
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Has he ever received a formal complaint from someone with significant business interests in the Irish economy?
Eoghan Murphy (Dublin South East, Fine Gael)
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For an article or a series of articles?
Eoghan Murphy (Dublin South East, Fine Gael)
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What about a complaint from a major shareholder in the newspaper?
Eoghan Murphy (Dublin South East, Fine Gael)
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A view was expressed here yesterday that editors are hired or chosen because they have a similarity of viewpoint with the owner. In this case there is a shareholding but there are majority shareholders. Can Mr. O'Regan tell me a bit about how he was hired? Does he think he was hired because he shared a similar viewpoint with a majority shareholder?
Mr. Gerry O'Regan:
It is hard for me to get into the mindset of those who were making the appointment at the time. I think the main reason I was hired is because I had a reasonable track record, in the sense that I had been deputy editor of the Irish Independentfor some years. Prior to becoming editor of the Irish IndependentI had edited two other newspapers for a total of about 11 years. I would have had, at the time, a lot of practical hands-on experience. I think the appointment was made, as I said and I keep coming back to it, to try to optimise the sales and make sure the paper held its share of the market, etc.
Eoghan Murphy (Dublin South East, Fine Gael)
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Did Mr. O'Regan have a relationship with any of the shareholders?
Eoghan Murphy (Dublin South East, Fine Gael)
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Did Mr. O'Regan speak regularly with them? Did a shareholder take him to lunch once a year, or once every two or three years, to talk about the paper?
Mr. Gerry O'Regan:
At the time, Anthony O'Reilly was the predominant shareholder. We would meet him, usually, at the AGM or maybe subsequently when he would have a social event in his house. Other shareholders or members of the board would be there and people of that ilk. I did not have an ongoing relationship or interaction with shareholders in the company, no.
Eoghan Murphy (Dublin South East, Fine Gael)
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Was editorial policy discussed at those social occasions or at the side of the AGM, for example?
Mr. Gerry O'Regan:
I do not think editorial policy would be discussed. Certainly, the challenges of the newspapers, how the newspapers were doing and various things like that would be discussed. The AGM was essentially a commercial meeting. The other meeting was primarily social and there would be a considerable number of people attending. It would not be the arena or event for a detailed analysis of the paper.
Eoghan Murphy (Dublin South East, Fine Gael)
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Was it an opportunity for the major shareholder to have a sit down one-on-one to talk, in detail, about the state of the economy or the Government?
Mr. Gerry O'Regan:
Again, maybe in conversation it would come up. I am not suggesting that it was like absolute rigid walls that one could not discuss "Yea" or "Nay". Obviously one would discuss the economy or I am sure, maybe at the time, the property boom and how things were going but it would be part of general discussion. At the end of the day it is very difficult to come up with a precise formula for what should or should not be covered in newspapers which will absolutely work by way of the newspaper.
Eoghan Murphy (Dublin South East, Fine Gael)
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So a major shareholder in the company would have the opportunity to convey his or her views to Mr. O'Regan on matters of significance.
Eoghan Murphy (Dublin South East, Fine Gael)
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Did that happen?
Eoghan Murphy (Dublin South East, Fine Gael)
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Were those views ever conveyed to Mr. O'Regan by way of an instruction?
Eoghan Murphy (Dublin South East, Fine Gael)
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Was Mr. O'Regan ever concerned by those interactions in terms of how they might influence his decision-making as an editor?
Eoghan Murphy (Dublin South East, Fine Gael)
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I thank Mr. O'Regan. I will ask Mr. Doorly a couple of questions.
Ciarán Lynch (Cork South Central, Labour)
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The Deputy has one minute left.
Eoghan Murphy (Dublin South East, Fine Gael)
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I thank the Chair and I will have to be brief then. In relation to the property supplement, and Mr. Doorly has mentioned that there were three, how does management view the property supplement? Is the supplement purely a vehicle for selling advertising?
Mr. Michael Doorly:
There is no doubt that management would view all supplements as having a different personality, different character, and different make-up from the main newspaper. Supplements are primarily commercial, be it the recruitment section or the motors supplement or the travel supplement. They are primarily a commercial vehicle. I think the editorial content and make-up is the domain of the editor but in reality they are there to carry ads for advertisers to promote goods or services, including property, so they are primarily commercial. Generally speaking, there would be more than 65% advertising and a lot less editorial, whereas in the main newspaper it is the reverse. It is primarily editorial content carrying some advertising.
Eoghan Murphy (Dublin South East, Fine Gael)
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An advertiser buys an expensive slot, say, the front page-----
Ciarán Lynch (Cork South Central, Labour)
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This is the Deputy's final question.
Eoghan Murphy (Dublin South East, Fine Gael)
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No, the main newspaper, because the main newspaper is not a commercial vehicle. If he or she buys the prime slot on the main page, what power does he or she have over what appears on the front page of that newspaper as a result?
Mr. Michael Doorly:
None. How this works in practice is the editor has his daily conferences with his team and he goes through the news agenda and they select whatever it might be that will make up the newspaper the next day. There is no commercial involvement whatsoever. There never has been. I am in the company more than 20 years. I have never attended nor has anyone else in the commercial side ever attended these conferences. They are the domain of the editor and they are completely separate from the commercial side. The answer to the Deputy's question would be a categorical "No." I am surprised it is even asked, but there you go.
Joe Higgins (Dublin West, Socialist Party)
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Mr. O'Regan said "there was no conscious attempt on my part, or on the part of the newspaper, to fuel what has been described as the property boom". The Irish Independent, from 2003 to 2008, gave substantial coverage and sponsored and promoted the property awards. In 2004, for example, this is the type of coverage that was over many pages and it was described in 2004 as "A glittering showcase of the cream of Ireland's property and development industries" and "An elite gathering of over 1,000 property professionals witnessed the cream of Ireland's residential and commercial products and services at the glittering Property Awards ceremony this week". The property editor said:
[T]ributes were paid to the outstanding skills and performance of the individuals and firms involved. The winning projects and services provided by our outstanding agencies ably demonstrated the progress and innovation of this sector, which matches, if not surpasses, the high standards globally.
[...]
The relaxed black tie event was a welcome respite for an industry that has worked to full capacity in recent years ... attended by a record 1,000 property professionals with several hundred disappointed.
The awards were followed by a casino evening. The property editor sums up: "This annual awards dinner followed a conference held earlier in the day which predicted the short-term future of the Irish property market and also saw the unveiling of a new addition to the awards - The Irish Property League - which ranked the top ten commercial agents in terms of staff, net worth, turnover, profit, and investment deals at home and overseas."
Ciarán Lynch (Cork South Central, Labour)
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The Deputy should move to a question.
Joe Higgins (Dublin West, Socialist Party)
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The commercial property expert said: "No deal is too big, no proposition too ambitious for today's property professionals. The world is their stage." Going forward to Mr. O'Regan's own period particularly, in 2007 we have further very substantial coverage and again the property editor wrote, "Tribute was paid to the risk takers who are flying the Irish property flag at home and abroad ... who have demonstrated their courage by forging paths where few, if any, Irish people have ventured before", and so forth. Among the awards was Irish investor of the year, Irish developer of the year, international property achievement, Irish commercial development of the year, Irish property personality of the year and residential development of the year. Of those glittering awards, in 2007, the Irish property deal of the year was the Irish Glass Bottle site which cost the taxpayer hundreds of millions. Seven of the award winners ended up in NAMA, five of whom were among the top ten debtors to Anglo Irish Bank, which cost the taxpayer billions of euro. In view of all this, would Mr. O'Regan like to revise his statement that no conscious attempt was made on the part of the newspaper to fuel what has been described as a property boom?
Mr. Gerry O'Regan:
I would not. What I would like to do is to put that in context. The Irish Independent, in common with various newspapers, has award ceremonies. We have had theatre awards, sports star awards, young entrepreneur of the year awards and, I think, maybe young scientist awards, etc. Going back to that time, we had an award for the property industry which was, as I said, in the context of the knowledge which we had at that time, whereby this was taken at a time when it was believed that the economy, the construction industry and the development of it was critical to our economic development.
Joe Higgins (Dublin West, Socialist Party)
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Mr. O'Regan has explained that but the time is short. If he does not consider that it fuelled the property boom, did it glamorise the property boom?
Mr. Gerry O'Regan:
It is like taking a statement from a politician who makes a judgment on a particular issue, say three years ago, and she makes it in the light of known circumstances at the time. One can pick up that statement three years later and say: "Did you not know what was going to happen?"
Joe Higgins (Dublin West, Socialist Party)
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I am not asking Mr. O'Regan that. I am asking him if he considers that this type of extensive coverage fuelled the property boom, if it glamorised it, never mind what happened later.
Mr. Gerry O'Regan:
If I could put it into context, the point I have tried to make since my opening statement is that the newspaper tried to embrace varying strands of opinion. That was the opinion of the property section in the newspaper, that things were going well and that they would continue to go well. I will read four paragraphs that Sinead Ryan wrote around the same time, on 21 February.
Joe Higgins (Dublin West, Socialist Party)
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I do not have time. I know there were what are called contrarian views.
Joe Higgins (Dublin West, Socialist Party)
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What I am posing is the predominant editorial line. I have put the questions to Mr. O'Regan but I want to move forward quickly.
Ciarán Lynch (Cork South Central, Labour)
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The Deputy is very close to time now.
Joe Higgins (Dublin West, Socialist Party)
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Our inquiry research team has shown on hard data that between 1996 and 2006, the price of an ordinary home increased each year for ten years by the equivalent of the average industrial wage. By common consent there was rampant profiteering in the housing market and in speculation on building land. Did Mr. O'Regan ever launch a project of investigative journalism to uncover the rampant profiteering in the housing industry, in land speculation, and how that would affect young people buying homes using 40-year mortgages and paying unsustainable levels of mortgage repayments?
Ciarán Lynch (Cork South Central, Labour)
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The Deputy is well over time. I need to take a response.
Joe Higgins (Dublin West, Socialist Party)
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What was known was the massive increase in house prices and rampant speculation in building land, including by people who got some of the glittering awards from INM. Did the group ever launch a project of investigative journalism to uncover the level of profiteering and how it impacted very negatively on a young generation of people trying to buy homes?
Mr. Gerry O'Regan:
The price of building land and the profits made from it are essentially contingent on the political culture and legal processes operating in the country at the time. That is still the case. The profitability of development land is a political issue, but we certainly ran various pieces about the problems of young people and others, including the problems of 100% mortgages. I have various cuttings here.
Joe Higgins (Dublin West, Socialist Party)
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Did the newspaper ever try to get to the heart of who was profiteering among the developers and the bankers?
Ciarán Lynch (Cork South Central, Labour)
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I must interject. The question was asked, but I must summarise, as we have to move on because we are way over time. There were standalone articles about what was happening in different sections of the property market. The question is whether there was a targeted investigation programme by the INM group of newspapers in regard to what was considered to be excessive overpricing of property and the impact this was having on purchasers of homes rather than investors.
Kieran O'Donnell (Limerick City, Fine Gael)
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I welcome Mr. O'Regan and Mr. Doorly. Mr. O'Regan has made much about having contrarian views in the newspaper. Morgan Kelly's piece is seen as the defining article. Senator O'Keeffe referenced an article in Vanity Fairin 2011 which indicated that Morgan Kelly sent his piece to the Irish Independent, but the newspaper's editor wrote back to him stating that he found the article offensive and that it would not be published. Mr. O'Regan has stated that he would not have described it as offensive. For absolute clarity, did Morgan Kelly contact Mr. O'Regan as editor of the Irish Independent?
Kieran O'Donnell (Limerick City, Fine Gael)
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Did he write to Mr. O'Regan?
Mr. Gerry O'Regan:
Not in my memory, and I certainly never wrote to him. Various pieces are submitted. I am sure Morgan Kelly would be able to clarify the date he submitted the piece and who wrote back to him. All I can say is that I certainly did not write back to him. I have no memory of receiving that piece.
Kieran O'Donnell (Limerick City, Fine Gael)
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The witness has no recollection of any of that?
Kieran O'Donnell (Limerick City, Fine Gael)
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He is refuting the Vanity Fairarticle.
Kieran O'Donnell (Limerick City, Fine Gael)
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This was 2007.
Kieran O'Donnell (Limerick City, Fine Gael)
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To move on, in Mr. O'Regan's time as editor of the Irish Independent, was there a group editor of the INM group?
Kieran O'Donnell (Limerick City, Fine Gael)
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Mr. O'Regan was completely standalone as an editor.
Kieran O'Donnell (Limerick City, Fine Gael)
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The question has come up of whether issues might have arisen, particularly with regard to the property sector, which we are now covering as part of the banking inquiry, and whether any stakeholder involved in INM - or a chief executive or management - might have made contact on a particular issue. It may have referred to some feature running in the Irish Independentwhich they were unhappy with.
Kieran O'Donnell (Limerick City, Fine Gael)
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None at all? The group acquired www.propertynews.com, which was a property website. What was paid for it?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is it not correct that Mr. Doorly was finance director at the time?
Mr. Michael Doorly:
I was finance director of Independent Newspapers (Ireland) Limited at the time, which is the Irish subsidiary of Independent News & Media. That acquisition was made by our UK sister company. It was a business in Northern Ireland. I would have been aware of the scale of the purchase. It would have been between €5 million and €10 million.
Kieran O'Donnell (Limerick City, Fine Gael)
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Does the website operate in the Irish market as well?
Mr. Michael Doorly:
At the time there were 20,000 units, or properties for sale, on the website, with 16,000 in Northern Ireland and 4,000 in Border counties of the Republic of Ireland. It was primarily a Northern Ireland business and it was purchased as part of our digital strategy, as we were reducing our dependence on newspapers, as I stated earlier. We were moving into radio, advertising and new media.
Kieran O'Donnell (Limerick City, Fine Gael)
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In his presentation, Mr. Doorly indicated that circulation had increased by approximately 17%.
Kieran O'Donnell (Limerick City, Fine Gael)
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Reading publications between 2005 and 2010, it seems that circulation decreased for both the Sunday Independentand the Irish Independent.
Kieran O'Donnell (Limerick City, Fine Gael)
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How can this be reconciled with the period about which we are talking?
Mr. Michael Doorly:
In the period we are discussing, the economy was buoyant and growing, and people were buying newspapers, among other consumables. There was great interest in jobs, property, motoring and travel. Newspaper purchases were solid. We have to get into technology such as smartphones and the like, as since that time some structural change has been taking place. People, and particularly the younger generation, are moving from the printed product to their phones. That is the reality.
Kieran O'Donnell (Limerick City, Fine Gael)
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The purchase of www.propertynews.comwas funded via the UK operation. Is that correct?
Kieran O'Donnell (Limerick City, Fine Gael)
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Would the witnesses have had any involvement in running that operation at all?
Kieran O'Donnell (Limerick City, Fine Gael)
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Did journalists take trips in that regard or was there hospitality involved?
Kieran O'Donnell (Limerick City, Fine Gael)
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If Morgan Kelly's article had landed on Mr. O'Regan's desk, would he have published it?
Sean Barrett (Independent)
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I welcome our visitors. What was the revenue from the sale of the Abbey Street and Prince's Street premises when moving to Talbot Street and Citywest?
Mr. Michael Doorly:
The revenue from that transaction was in the region of €24 million. That partly funded the transfer of the print facility to Citywest, where we invested in new presses and a mail room. At the time, those new presses could facilitate more colour than the previous equipment, so it was a significant investment that would have exceeded the €24 million we gained from the sale of our Abbey Street premises. The move to Talbot Street was to a rented property.
Sean Barrett (Independent)
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We have seen evidence of the growth of the public relations sector. One of the witnesses yesterday stated that in the US it became four times bigger than the number of working journalists in newspapers. How many public relations documents would reach an editor's desk in an average week?
Mr. Gerry O'Regan:
I am sure there were many. Alastair Campbell, a spin doctor of the former British Prime Minister Tony Blair, has written much about this. He has articulated fairly clearly what one may describe as the constructive state of mutual antagonism which often exists, broadly speaking, between the public relations industry and journalism.
Any journalist worth his or her salt knows that there is often a conflict between what is PR and what makes news. Most journalists can tell the difference. That is not to say that, perhaps on occasion, those in PR utilise leaking news. As we know, this happens relentlessly in politics. The vast majority of journalists and PR people coexist but perhaps in an uneasy world. That is how it always has been and, I am sure, how it always will be.
Sean Barrett (Independent)
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Is it a career path? Do many journalists want to go into PR rather than into investigative journalism?
Mr. Gerry O'Regan:
Some journalists have crossed over and have become much wealthier than they were when they worked in their former profession. It is a case of everybody to his or her own choice. I do not see the spectre of PR as some new dark force threatening the very existence of the Fourth Estate. Nor do I see those involved in the industry getting their way with often strong-willed journalists. The journalist is primarily motivated by trying to obtain copy that is of interest to the public. PR material is often not of interest to the public.
Sean Barrett (Independent)
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Is there sufficient time to write copy? We heard evidence yesterday to the effect that when the PR material is obtained, a journalist must then contact somebody else involved in the sector. However, he or she has no time to carry out independent research in order to write a properly rounded article. As a result, we tend to receive the views of incumbents rather than those of contrarians such as David McWilliams, who is, of course, an honourable exception in all of this.
Mr. Gerry O'Regan:
I am of the view that there is time for journalists to appraise, assess, dismiss, discount or amplify material they have received from PR professionals. Another aspect of the backdrop to all of this is the fact that the Republic of Ireland is one of the most competitive media arenas on the planet. We import a great deal of media material from the UK via the BBC, various satellite television stations and different British radio stations and newspapers. Generally speaking, Irish newspapers have been pretty competitive for the past number of decades. They have been obliged to fight fairly hard to survive. If a newspaper is reproducing a large amount of PR material all the time, this will not prove to be good for it.
Sean Barrett (Independent)
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In discussing matters with Irish Independentjournalists, did Mr. O'Regan pick up on any nuances with regard to what was happening? Did any of them ever indicate that they did not like the look of what was happening at Anglo Irish Bank or Irish Nationwide? Did anyone ever state that they were of the view that a particular briefing given by the Central Bank was strange and that they were concerned with regard to the direction in which the country was going? Were any such nuances evident during Mr. O'Regan's discussions with his journalists?
Mr. Gerry O'Regan:
If one were to look back, perhaps the great untold story which none of the journalistic outlets in Ireland got at the time relates to the problems being experienced by two of the banks here. However, one must recognise that the Central Bank, the IMF, the regulator and various powerful and influential people were essentially saying that matters were okay. There may well have been some journalists who had a whiff of unease with regard to what was happening at the time. There are many stories about which journalists have a whiff of unease but it is necessary to obtain the relevant facts and figures that will keep a publication out of the libel court. In the context of the entire economic collapse which took place in Ireland, that was the "Watergate story" and, unfortunately, no one in the media got it. I do not believe that was for the want of trying or effort. Perhaps some journalists who were good at financial analysis may have had a feeling but nobody could write about it.
Sean Barrett (Independent)
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Did people in provincial cities raise concerns with Mr. O'Regan to the effect that decision making in Irish banks had been replaced by a speaking clock-type of mechanism at their headquarters and that such banks were losing touch with the real economy outside Dublin?
Mr. Gerry O'Regan:
There was the beginning of unease about what is now being described as a broad withdrawal from rural Ireland. The latter had to do with banks and post offices and there was also the fact people who sought to contact either were treated to a kind of amorphous speaking clock-type of response from individuals at call centres in Dublin or India. That was an issue at the time and it has become an even greater one now.
Marc MacSharry (Fianna Fail)
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I welcome our guests and thank them for attending. Mr. O'Regan quoted from a number of articles earlier, one of which was written by Brendan Keenan. Morgan Kelly was mentioned in that article in the context of an ESRI forecast. What was the headline on that article?
Marc MacSharry (Fianna Fail)
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I would be interested in discovering whether the headline stated "ESRI gives positive outlook" or "Morgan Kelly says there is going to be a crash".
Marc MacSharry (Fianna Fail)
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Mr. O'Regan stated earlier that his primary fixation was optimising sales of newspapers.
Marc MacSharry (Fianna Fail)
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In doing that job, would that fixation involve editing in a way to try to ensure that an editorial would take the form of something people either want to hear or need to hear?
Mr. Gerry O'Regan:
If I could answer that question about what people want to hear and what they need to hear, it is obvious that the answer is an amalgam of both. The ultimate test is whether people actually read the relevant material. It actually comes down to what it is they want to read. Market research surveys have been carried out by various media organisations since time immemorial in the interests of trying to find an answer to the question of what exactly it is that people want. Ergo, it is very simple: one just produces a newspaper in which one gives people precisely what they ask for. No more than is the case in politics, the variable of the human condition is profound.
Marc MacSharry (Fianna Fail)
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Is that a "Yes" or a "No"?
Marc MacSharry (Fianna Fail)
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Okay, but that might also be what they want to hear.
Marc MacSharry (Fianna Fail)
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Will Mr. Doorly indicate if there is a property sales executive and a recruitment sales executive or is it just a general position?
Marc MacSharry (Fianna Fail)
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Do people specifically work on property matters all of the time or is it for a week or-----
Marc MacSharry (Fianna Fail)
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Who set the targets?
Marc MacSharry (Fianna Fail)
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Who set the targets for the advertising director?
Marc MacSharry (Fianna Fail)
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Did Mr. Doorly play a role in that regard?
Marc MacSharry (Fianna Fail)
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Would actuarial analysis have been carried out in order to determine the targets that were set in respect of different areas?
Ciarán Lynch (Cork South Central, Labour)
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I apologise for interrupting but there is interference on the sound feed from a mobile phone. I do not know from where it is coming. Will members and witnesses check their phones and ensure they are either in airplane mode or switched off? If they are left on, they interfere with the sound.
Mr. Michael Doorly:
The targets were set in line with expected trends in the economy at a general level. Then at a specific level one would delve into each category, be it run-of-paper display advertising, which would follow consumer spending, motors, for which statistics would be available, and recruitment, which is pretty general. Property would also be pretty general but it would be lined up with general predictions and reports coming from stockbrokers more than from specialists.
Marc MacSharry (Fianna Fail)
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Would an advertisement in a property supplement cost the same per square inch as one which appears in a travel supplement?
Marc MacSharry (Fianna Fail)
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Would a recruitment advertisement be less expensive than a property advertisement?
Marc MacSharry (Fianna Fail)
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Would that be in the main body of the paper?
Marc MacSharry (Fianna Fail)
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Would the bonus structure for a sales executive who was focused on property be the same as for someone who was selling recruitment space?
Marc MacSharry (Fianna Fail)
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If I were a sales executive focusing on property, what salary range would I be in and what would the bonus structure have looked like?
Mr. Michael Doorly:
The Senator is again focusing on property, but as I said before, we had no undue focus or dependency on property at all. Generally speaking, salaries in that area would be from €45,000 to €60,000 and generally the bonuses would have given individuals the opportunity to make approximately 20% of their base salary in terms of commission. That would be reasonable and in line with industry practice.
Marc MacSharry (Fianna Fail)
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Would an individual sales executive have the freedom, or would it have to be at Mr. Doorly's or some other level, to do deals for bigger boys or people who might be taking six months worth of advertising and so on?
Mr. Michael Doorly:
The Senator refers to bigger boys, but the reality is that these advertisements came primarily, if not totally, from the estate agents. On deals, there was a set rate card and pre-agreed discount levels within the department. Anything outside of that would have been agreed with the ad director.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I welcome the witnesses. I have just a couple of questions and will deal with them as quickly as I can. Yesterday I asked the representatives from the Irish Examinerthe question I will now put to Mr. O'Regan and Mr. Doorly. In their time as editor or director of their respective publications, did they ever have any formal or informal meetings with representatives of property or banking interests where editorial content or viewpoints were discussed?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Yesterday we had a couple of academic witnesses before the committee who raised particular issues. I would like to put to Mr. O'Regan a comment made by Dr. Julien Mercille. He stated that, "news organisations largely conveyed the views of political and economic elites ... Thus, because the housing boom was beneficial to key sectors of Irish corporate and political establishment, it was never ... challenged". What are Mr. O'Regan's views in regard to his publication and his time as editor in regard to that comment?
Mr. Gerry O'Regan:
I think that is a judgment. One can say there are the establishment media, in the sense that the media are in existence and are there, so to speak. Certainly, broad-selling newspapers, both here and in Britain, must reflect the concerns of a mass market. The demographic breakdown of the Irish Independentreadership more or less represents what is broadly described as middle Ireland, town and country people who are fairly well off, but a broad mass who are in the middle and some who are not well off at all. That has been the overall market position of the paper.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Is Mr. O'Regan rejecting the assertion?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I also want to put to the witness a comment from Mr. Harry Browne yesterday. He stated journalists "were leaned on by their organisations not to talk down the banks". In regard to his time as editor, is Mr. O'Regan aware of any such leaning on journalists by the organisation?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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No, by the newspaper's own organisation.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I do not want to dwell too much on the Vanity Fairarticle but has Mr. O'Regan ever, in his time as editor in particular but outside of that as well, had any contact with Professor Morgan Kelly, either personal one-to-one contact or by phone or e-mail?
Mr. Gerry O'Regan:
No, and I have never met him. I would be interested in discovering the facts of that particular submission, who it was submitted to and the details of it. As I said, I have no memory of that and I never wrote him a letter. During my time, I was anxious to get broadly discursive material on any topic I felt people would read. That was my objective.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Around that time, a number of people from Independent News & Media would have had contact with Professor Kelly and a well documented "Prime Time" debate took place on 30 September 2008 where the economics editor, Brendan Keenan, and Professor Kelly engaged in a discussion on the banks. This occurred on 30 September 2008, a crucial juncture. Brendan Keenan said: "[W]e know what the Irish banks' bad loans are, they're going to be about 1% of their loan books." Professor Kelly's response to that was: "No, that's complete nonsense." Mr. Keenan was appearing on the programme as the economics editor of the Irish Independentat the time. Was there ever any discussion between him and Mr. O'Regan as to his views on banking matters at that critical juncture or was he just offering a personal opinion?
Mr. Gerry O'Regan:
I did not realise he was on a one-to-one debate with Professor Kelly and I did not speak to him before it. He is quite capable of giving his own views, which he did at the time. I was unaware of that and did not know it happened, but he certainly never discussed it with me. He was obviously giving his own economic assessment.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Is it possible Professor Kelly's article could have been delivered to another member of the editorial group within the Irish Independentat the time and that there is a mix-up as to who responded on behalf of it?
Pearse Doherty (Donegal South West, Sinn Fein)
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Cuirim fáilte roimh an bheirt chuig an fiosrúchán. I want to pick up on that point. Mr. O'Regan was editor until 2012 and the Vanity Fairarticle was published in March 2011. Did he read the article?
Pearse Doherty (Donegal South West, Sinn Fein)
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It would have been well read and reported in the Irish media at the time. The article mentioned the newspaper Mr. O'Regan edited, and stated an editor refused to publish Morgan Kelly's paper, saying it was offensive. At the time, did Mr. O'Regan check with any of his other editors whether they were the person who allegedly wrote to Morgan Kelly using the phrase saying they would not publish it because it was offensive.
Pearse Doherty (Donegal South West, Sinn Fein)
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The Vanity Fairarticle, which Mr. O'Regan says he read, names two publications, one the Irish Independentand the other The Sunday Business Post, the editor of which, the letter says, sat on it. As editor of the first newspaper, did Mr. O'Regan not think he should find out from Michael Lewis, the author of the Vanity Fairpiece, whether a piece had ever been submitted to an editor of the Irish Independent?
Mr. Gerry O'Regan:
That particular dimension of the matter did not come into my radar at the time. I was aware that Morgan Kelly had written a piece, but I was unaware that there was any controversy that the Irish Independenthad rejected it. I have already said, and stand over this, that I was unaware that Morgan Kelly had actually submitted his article to the Irish Independent.
Pearse Doherty (Donegal South West, Sinn Fein)
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Mr. O'Regan said he read the Vanity Fairpiece.
Pearse Doherty (Donegal South West, Sinn Fein)
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So Mr. O'Regan never read Michael Lewis' piece?
Pearse Doherty (Donegal South West, Sinn Fein)
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Did nobody in the Irish Independentbring it to Mr. O'Regan's attention at the time that there was a major piece on the Irish economy which named the Irish Independent?
Pearse Doherty (Donegal South West, Sinn Fein)
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Fair enough. Mr. O'Regan mentioned Brendan Keenan's article in April 2007 which referenced Morgan Kelly.
What was the purpose of mentioning that article?
Mr. Gerry O'Regan:
Brendan Keenan was assessing an ESRI study on the economy. From what I understand of his piece, Morgan Kelly had an input into that study which was seemingly apart from the study per se. Presumably because Morgan Kelly's views were in the public domain at the time, Brendan Keenan assessed his views and, as I noted earlier, accepted that he was making a valid point should events transpire in certain ways.
Pearse Doherty (Donegal South West, Sinn Fein)
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Mr. O'Regan was asked about the headline of the article but he said he does not have it. I have the article in front of me. The headline is "Past may be another country but we're not in a crisis right now". Is Mr. O'Regan surprised at that being the headline of the article?
Mr. Gerry O'Regan:
No, I am not because the ESRI, which was one of the primary economic forecasting units in the country, had come out - I do not want to rehearse the details because I have already described them - to project a quite benign view for the future of the Irish economy. Obviously the headline reflected the essential tone of the piece, which was intrinsic to the ESRI's findings. The essential point I was making, however, is that rather than ignoring an aside conclusion offered by Morgan Kelly, our economics editor took it on board and accepted that he had a valid point.
Pearse Doherty (Donegal South West, Sinn Fein)
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In the conclusion of his article he wrote:
In fact, the economy itself looks in fine shape. Foreign investment seems to have grown by 10pc last year. Exports have picked up after three years in the doldrums. Booming. The services and financial sectors are booming, and not all of it is based on property. What we have is not a crisis, but a big challenge of economic management and adjustment.
In regard to Morgan Kelly, he wrote that it was not impossible but we know anything is possible. I have another question about the piece which is relevant to how it was presented. It included a major cartoon with the punchline of "loose lips sink booms". The cartoon depicted three people wearing gags, with the phrases "doom and gloom" and "economists' meeting" underneath them. Does Mr. O'Regan think the placement of that cartoon was a reflection on Morgan Kelly's analysis of the Irish economy, with which Brendan Keenan clearly disagreed given his comments in the article?
Mr. Gerry O'Regan:
I do not have any memory of that cartoon. It may be a reflection of the overall piece. In many ways, it encapsulates much of the debate about the Irish economy at that time. As has happened on previous occasions and as continues to happen, two economists were disagreeing about what the future holds.
Pearse Doherty (Donegal South West, Sinn Fein)
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We are familiar with that.
Ciarán Lynch (Cork South Central, Labour)
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The Deputy should ask a question.
Pearse Doherty (Donegal South West, Sinn Fein)
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Another article pertaining to Morgan Kelly carried the headline, "Banking collapse economist was 'just spouting off'". The article referred to opinions Morgan Kelly had expressed in e-mails he sent to UBS. The last paragraph of the article states:
In 2002, he was promoted to professor in UCD where he is "highly regarded", according to one source at the university. It can be safely assumed that after this latest comment he is a lot less well regarded in Irish banking and stock market circles.
This was in 2008. Did some sections of the Irish Independenthave an issue with Morgan Kelly?
Mr. Gerry O'Regan:
No. I do not know who wrote that piece but I think he or she was making a reasonable assumption that if somebody breaks party ranks - in fairness Morgan Kelly broke ranks with the economic conventional thinking of the time and in many ways has to be admired for it - his colleagues in the overall academic fraternity may not have been overly enthusiastic about his views. One of the issues at that point in time was that the overall academic economic entity in the Republic of Ireland was, broadly speaking, unified in a view that did not chime with Professor Kelly's views. That is why we are speaking about him. To an extent he was a lone wolf and he is to be admired for having the courage of his convictions in speaking out.
Pearse Doherty (Donegal South West, Sinn Fein)
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Did the Irish Independentunder Mr. O'Regan's editorship ever print an article by Morgan Kelly? The newspaper has suggested that the committee's module on the role of the media could pose a threat to freedom of the press and media freedom. I am interested in Mr. O'Regan's views on that matter. Does he believe that an inquiry of this nature, which involves asking certain questions on the media, is a threat to press freedom?
Ciarán Lynch (Cork South Central, Labour)
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Does Mr. O'Regan concur with the general sentiment expressed in a newspaper with which he is associated?
Pearse Doherty (Donegal South West, Sinn Fein)
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The journalist is Dan O'Brien and he is entitled to his view. In the article he makes many valid suggestions as to what the inquiry should do. My question for Mr. O'Regan, as the former editor of a number of newspapers, pertains to his view of politicians inquiring into issues such as the banking collapse and asking questions of journalists in regard to their role. Is that a threat to press freedom, in his view?
Pearse Doherty (Donegal South West, Sinn Fein)
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My previous question was whether the newspaper under Mr. O'Regan's editorship ever carried an article by Morgan Kelly in its entirety.
Ciarán Lynch (Cork South Central, Labour)
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As I am moving towards the conclusion, I invite Senator O'Keeffe to ask a final question, with a supplementary question, followed by Deputy Michael McGrath.
Susan O'Keeffe (Labour)
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May I put a question to each of the witnesses?
Ciarán Lynch (Cork South Central, Labour)
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Yes, indeed.
Susan O'Keeffe (Labour)
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There was a development on Cape Verde, an island off the coast of Africa. During his tenure, Mr. O'Regan's newspaper ran one article per month between the end of 2005 and 2006 on this development. I cite this as an example of the kind of promotion given to a particular form of property development because I want to ask him about it. How did the journalists get to Cape Verde and what kinds of payment were involved? It was also being promoted by the cousins of a columnist for the Sunday Independent. This is an interesting example of some of the matters covered by his newspaper at the time.
Susan O'Keeffe (Labour)
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Both newspapers. Several journalists were involved in promoting it as a place to invest money.
Susan O'Keeffe (Labour)
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Were they taken out for free?
Susan O'Keeffe (Labour)
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Mr. O'Regan does not know, although he was the editor at the time.
Susan O'Keeffe (Labour)
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Why does he not know? He was the editor at the time.
Susan O'Keeffe (Labour)
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Does he think that was okay?
Susan O'Keeffe (Labour)
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Mr. O'Regan said in response to Senator MacSharry that part of his remit was to give people what they want to read. I am puzzled.
Susan O'Keeffe (Labour)
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Sorry, I wrote the quote down differently.
Susan O'Keeffe (Labour)
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His remit is what they want to read rather than what journalists should be doing in terms of seeking to challenge power.
Susan O'Keeffe (Labour)
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Right.
Finally, can Mr. Doorly give us some idea about this? Obviously Irish News and Media, INM, was a public company listed on the Stock Exchange with a board of directors all during this time.
Susan O'Keeffe (Labour)
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Without naming names, could Mr. Doorly give us a profile of the type of people who were on the board during that period?
Mr. Michael Doorly:
Their interests would also be stated but with regard to the type of people we are talking about, if I can generalise, there were 20 or so members of the board at this time. It was a relatively stable board. It represented some of the key shareholders who were in Ireland and from overseas, so there was an Australian and a South African influence to those investments.
Susan O'Keeffe (Labour)
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People are more interested in the Irish ones.
Mr. Michael Doorly:
On the Irish side, Tony O'Reilly was the key shareholder with the largest holding. Gavin O'Reilly was on the board, Vincent Crowley was on the board, Peter Cosgrove was on the board and Joe Davy was on the board. The list of names is there for all to see and their other business interests are also listed.
Susan O'Keeffe (Labour)
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The point I was trying to make was that on that board at that time the company would have a representative of stockbrokers, the chairman of Allied Irish Bank, two former politicians, a director of the Central Bank and also another member of AIB. I was trying to give people a feel for the people on the board of INM at the time. They were not newspaper people.
Susan O'Keeffe (Labour)
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In addition to those, I know there were others.
Ciarán Lynch (Cork South Central, Labour)
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Can the Senator put her question as I want to move on?
Susan O'Keeffe (Labour)
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Finally, my question is what sort of ethos would the board of the company lay down, given that it is a public company with shareholders who are looking for a return?
Ciarán Lynch (Cork South Central, Labour)
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We will hear about the ethos of the company and then I will move on.
Susan O'Keeffe (Labour)
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What ethos is laid down by the board?
Mr. Michael Doorly:
I am guessing now because I do not attend board meetings. What was filtering down to us was to drive excellence in the product through good reporting and good journalism and to drive excellence on the commercial side, and on the commercial side that involved introducing efficiencies. We have seen a lot of references to cost reduction, unfortunately, but there was also investment. There was investment in the people. We have had investment in the printing presses and we have had investment in various channels of distribution, and that is with regard to the newspaper. Then there was the expansion and the expansion into other businesses and all of that. I am not sure if that answers the Senator's question.
Ciarán Lynch (Cork South Central, Labour)
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I call Deputy Michael McGrath.
Michael McGrath (Cork South Central, Fianna Fail)
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Can Mr. Doorly clarify in regard to the 2013 restructuring of the group? There was a reduction in the overall debt of about €300 million-----
Michael McGrath (Cork South Central, Fianna Fail)
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-----part of which was the repayment of debt using the proceeds from the disposal of certain assets. Can Mr. Doorly clarify what was the debt write-down by the financial institutions as different figures have been thrown out?
Mr. Michael Doorly:
Yes. I think I gave the four elements that made up the restructuring, which was the sale of our business in South Africa, which was about €150 million. There was the restructuring of the pension plan and the write-down of the bank debt, which I said was over €100 million. I think it was about-----
Michael McGrath (Cork South Central, Fianna Fail)
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It was about €140 million.
Michael McGrath (Cork South Central, Fianna Fail)
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Is the breakdown of that on the public record between the eight financial incitations, including AIB and Bank of Ireland?
Michael McGrath (Cork South Central, Fianna Fail)
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Would Mr. Doorly have any comment to make on the contrast between such a large debt write-down for a large corporate entity and the treatment of ordinary people who took out large mortgages during the bubble years and who are now struggling under massive levels of debt and are not getting a write-down?
Mr. Michael Doorly:
The entire restructuring was complex. There was €400 million of debt on the balance sheet. The credit facilities of that €400 million could not be extended, so it was either restructure, as we did, or close the business. The only comment I have is that it was quite stark and I was involved in Periphery at the time. That was the choice, either restructure and take the write-down or shut the place down.
Michael McGrath (Cork South Central, Fianna Fail)
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I have a final question for Mr. O'Regan. Does he have any regrets about the reporting of the Irish economy and the property sector and the balance of coverage during his time as editor of the Irish Independent?
Mr. Gerry O'Regan:
No. I do not have regrets. Obviously, in light of subsequent knowledge, one would have different areas of emphasis but unfortunately when one is dealing with a daily newspaper, one does not have subsequent knowledge. One gets out the paper on the day as fairly and objectively as one can in light of the known circumstances. During my time there, by way of recruiting diverse opinions and allowing those opinions full outlet, I feel happy that I tried, as much as possible, to embrace the national debate at the time.
Michael McGrath (Cork South Central, Fianna Fail)
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Does Mr. O'Regan believe he did enough using the platform he had to challenge the consensus that was there?
Mr. Gerry O'Regan:
I think I did. As the evidence began to grow and emerge the challenge increased. I think that is a crucial factor. I do not think we kept our head in the sand. As growing evidence came of what was wrong in a variety of areas in the Irish economy, we began to challenge those areas. The proof of that is in the pages of the newspaper.
Ciarán Lynch (Cork South Central, Labour)
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To conclude, I invite Mr. Doorly and Mr. O'Regan to make any final comments if they wish to do so. Moving on from Deputy McGrath's comments, part of the role and work of the inquiry is not just to look to the past but also to look to the future to ensure that the type of crisis that was visited upon the Irish nation is not revisited upon us again. Not so much in terms of regrets but are there things that they might have done differently with the benefit of hindsight? In taking on that learning, is there something for the future that Irish media may need to learn from what happened in that past?
Mr. Gerry O'Regan:
The media in common with everybody else can be warned once again of the danger of hubris, the danger of a herd mentality and the belief that people can become masters of the universe. We suffered at the time almost unstoppable economic advancement and basic economic textbooks would have told us all that this will not continue the way it is going.
The other point is that in retrospect, from a journalistic point of view, and I adverted to it earlier, all the Irish media, including the Irish Independent, missed one of the really big stories of the time, namely, the problems which were in our banking sector, particularly in a certain number of the banks. That was hidden from view from practically everybody at the time, perhaps in retrospect on the question of could it or should it have been found out. To go back to the Watergate scandal, they got Nixon but they might not have. We did not get Nixon.
Ciarán Lynch (Cork South Central, Labour)
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Is there anything Mr. Doorly would like to add?
Mr. Michael Doorly:
We have been focusing on property and the demand for property, as we said, is created by a mix of factors, including the general economy, but it was really the availability of finance that appeared to drive the property bubble. We probably would have experienced the property bubble with or without the media and, therefore, I do not think it is the media that can be held responsible, but it was the other factors, the demographics, employments levels and income, but, primarily, at the end of the day it was the availability of credit. That, I think, is where the lessons have to be learned.
Ciarán Lynch (Cork South Central, Labour)
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With that said, I would like to thank both Mr. O'Regan and Mr. Doorly for their contributions and participation, in an informative and valuable way, in the committee of inquiry, which has added to the meeting today and to our understanding of factors leading to the banking crisis and crisis period. I excuse the witnesses.
I propose that we suspend the sitting until just after noon. Is that agreed? Agreed.
Ciarán Lynch (Cork South Central, Labour)
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In session 2 the committee of inquiry into the banking crisis will have a discussion with Ms Maeve Donovan, former managing director, and Ms Geraldine Kennedy, former editor of The Irish Times, on the role of the media during the property boom in the lead-in to the banking crisis in the period 2002 to 2007.
In our session this morning we focused on the role of the media during the property boom in the lead-in to the banking crisis in the period of 2002 to 2007 and any change in approach after the crisis. I welcome Ms Donovan and Ms Kennedy who have been invited to discuss The Irish Times' editorial policy on the economy and the property boom and, separately, the newspaper's business model and sources of revenue, including that from the real estate sector during that period. Ms Donovan joined the newspaper from ICC Bank in 1977. She held a number of senior management roles in the company before being appointed managing director of The Irish Times Trust Limited in 2007. She retired in 2010. She holds an MSc from Trinity College Dublin and has served as chairperson of NNI, the newspaper industry representative body. She has been a director of the International Newspaper Marketing Association, INMA, and served in the European national newspaper group of the World Association of Newspapers. She is also a director of the Children's Medical & Research Foundation, the fund-raising board for Crumlin hospital and the National Children's Research Centre.
Ms Kennedy was appointed editor of The Irish Timesin October 2002, the first woman to hold the post in the history of the newspaper, and retired in June 2011. She has covered politics for The Sunday Tribune, The Sunday PressandThe Irish Timesfor most of her career. She was a Member of Dáil Éireann between 1987 and 1989 when she served as spokesperson on foreign affairs and Northern Ireland for the Progressive Democrats Party and in the role of Chief Whip. She was a member of the Committee on Procedure and Privileges and the inaugural Anglo-Irish Parliamentary Tier. As editor, she was awarded five honorary doctorates for her services to journalism by Queen's University Belfast, 2005; Dublin Institute of Technology, 2007; University College Dublin, 2008; Trinity College Dublin, 2009; and the University of Limerick, 2012. She is an honorary member of the Royal Irish Academy and adjunct professor of journalism at the University of Limerick.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by the Chairman to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and, as they have been informed previously, the committee is asking them to refrain from discussing named individuals in this phase of the inquiry.
Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
I invite Ms Kennedy to make her opening statement to the inquiry.
Ms Geraldine Kennedy:
We have prepared in a way that my statement is better as the introduction.
I thank the committee for its invitation to discuss the role of the media during the property boom in the run-up to the banking crisis and also any change in approach adopted after the crisis. I am speaking as the former editor of The Irish Times. I retired in June 2011, having been appointed editor in October 2002.
Specifically, I was asked to address the newspaper’s editorial policy on the economy and the property boom between 2002 and 2007; the approach to reporting on the property market and the economy; and the contribution of the media to public understanding and debate around fiscal-budgetary policies and their implications. I have also been asked to cover the business model and sources of revenue. I will deal with that issue later.
I will be as helpful as I can in answering the committee's questions. In the limited time given to me to prepare this submission I have been unable to review every single aspect of the newspaper’s coverage in news, analysis, comment, opinion page, letters to the editor, etc. I have been asked to account for coverage over six years - 52 weeks a year, six editions per week, adding up to 1,872 publication days. It was impossible for me to read and review all of the material in every single issue ofThe Irish Timespublished in that period and I hope the committee will understand this. Unfortunately, the archive does not easily facilitate such a detailed analysis.
By way of introduction, I should, first, provide some background on how The Irish Timesoperates since it may be helpful in our discussion. Unlike most other newspapers, it is owned by a trust. There are only a handful of newspapers owned by trusts in the world today. The main object of The Irish Times Trust Limited and the company which manages and operates the newspaper, The Irish Times Limited, is "to publish The Irish Timesas an independent newspaper primarily concerned with serious issues for the benefit of the community throughout the whole of Ireland free from any form of personal or of party political, commercial, religious or other control".
The memorandum and articles of association set out the policy principles of the newspaper: the support of constitutional democracy through governments fairly elected; the progressive achievement of social justice between people and the discouragement of discrimination of all kinds; the promotion of a society where the quality of life is enriched by the standards of its education, its art, its culture, and its recreational facilities, and where the quality of spirit is instinct with Christian values but free from all religious bias and discrimination; the promotion of peace and tolerance and opposition to all forms of violence and hatred so that each man may live in harmony with his neighbour - I presume they intended women to be involved also - considerate for his cultural, material and spiritual needs; and the promotion of understanding of other nations and peoples and a sympathetic concern for their well-being.
The objects of The Irish Timesrequire that, in its journalism, news shall be as accurate and comprehensive as is practicable and be presented fairly; comment and opinion shall be informed and responsible, and shall be identifiable from fact; and that special consideration shall be given to the reasonable representation of minority interests and divergent views. I have appended a copy of the memorandum and articles of association for the committee's perusal.
From the above, the committee can see that The Irish Timeshas an unusual structure where the managing director and the editor each report independently to the board. It is designed to ensure the effective management of the newspaper’s strategic and commercial functions and the independence of the editor, working within the newspaper’s editorial policy. There is a partnership of equals with different responsibilities. It seems appropriate, therefore, that I address section 1 of the committee's questions and the former managing director, Ms Maeve Donovan, section 2 because of our separate roles.
I was asked to address the context of the banking crisis. Let me put the reporting of the economy and the property market in the context of some of the other major news events at home and abroad that we covered in The Irish Timesbetween 2002 and 2007 because we were not single-mindedly looking at the property market or the state of the economy. During that period there were two general elections; the invasion of Iraq; the introduction of the euro; changes in the leadership of Fine Gael, the Labour Party, the Progressive Democrats Party and Fianna Fáil; ten new members of the European Union; Mary McAleese’s election as President; the deaths of Pope John Paul II, Liam Lawlor and Charles J. Haughey; the historic meeting between Dr. Ian Paisley and former Taoiseach Bertie Ahern in Dublin, just to mention a few events. There was alsoThe Irish Timesstory in September 2006 that the then Taoiseach, Mr. Ahern, was receiving moneys from businessmen while he was Minister for Finance, which was to lead to the newspaper’s appearance before the Mahon tribunal and costly challenges in the High Court and the Supreme Court to establish the journalistic right to protect sources. I have supplied an appendix giving more detail of the types of issue that would have preoccupied an editor at the time.
However, admittedly with the benefit of hindsight, the boom and bust in the economy were the major event that spanned all of these years and had most impact on the lives of the people.
Editorial policy, by definition, is found in the leaders that express the views of the newspaper as determined by, or on behalf of, the editor every day. I was able in the limited time available to review the editorials and leaders published in The Irish Timesover the 1,872 editions that are the subject of this inquiry. The Irish Timeswrote 289 leaders expressing editorial policy on the economy and the property boom between 2002 and 2007. They were a major issue of concern in the editorial columns in those years. There were 38 leading articles in 2002, 73 in 2003, 56 in 2004, 52 in 2005, 31 in 2006 and 39 in 2007.
I am taking a narrow view of what the committee means by the economy and the property boom. Throughout those years, it is fair to say that the policy of The Irish Timeswas critical of both the establishment and operation of the Financial Regulator and IFSRA, the Irish Financial Services Regulatory Authority, believing they were not independent of the Central Bank. The newspaper was concerned about the erosion of competitiveness and critical of benchmarking in the determination of public sector pay, cautious about the banks’ lending policies and the scale of the property market. As an aside, the chairman of the board of The Irish Times Limited was the Financial Regulator between 2002 and 2008. I have attached an appendix on editorial policy on the economy and the property boom.
From 2003 onwards, the newspaper was warning that trends in the mortgage market were a cause for concern. This policy was consistently expressed in editorials in the following years. By way of illustration, in 2006, the newspaper was calling on the Central Bank and the then Government to analyse the risks the property market posed to future financial stability in an article “Rate change cause for moderation” on 3 March. In case I could be accused of being selective, I am presenting all editorials to the committee for its perusal. I have also written a short summary of the policy positions relevant to the banking inquiry.
In their book, The Fall of the Celtic Tiger: Ireland and the Euro Debt Crisis, the authors Donal Donovan and Antoin E. Murphy identified four separate but related crises that resulted in the collapse of the Irish economy which required an international financial rescue. These were, first, a property crash as the housing price bubble burst; second, a banking collapse where banks carrying too many non-performing property loans had their solvency questioned; third, fiscal failure as the economy contracted and tax revenue from property collapsed leading to the fourth crisis, sovereign debt. The Irish Timescovered all four crises in detail as these stories unfolded in stages over the years to the best of its ability. The coverage involved detailed news and analysis by reporters, specialist correspondents in the finance and business fields and the economic editors of that decade. In effect, Simon Carswell became a full-time specialist in covering the banking crisis. Extra resources and pagination were provided to the newspaper during this period. In addition to reporting, The Irish Timescommissioned articles about the banking crisis and the property market from specialists and noted academic economists. Its opinion pages were the platform for divergent views and public debate that often set the agenda and contributed to the national debate.
The Irish Timeswas the only newspaper to publish the article by Morgan Kelly, professor of economics in University College Dublin, predicting there would be a property crash with prices falling by between 40% and 60%. The first article was carried on 28 December 2006. Two others were carried subsequently. Other noted contributors to the debate in the newspaper included the current Governor of the Central Bank, Patrick Honohan, then professor in Trinity College Dublin, Professors Karl Whelan and Ray Kinsella, both University College Dublin, Brian Lucey, lecturer in finance, Trinity College Dublin, and Alan Ahearne, professor of economics, National University of Ireland, Galway. He later became an adviser to the late Brian Lenihan, the then Minister for Finance.
The same editorial standards applied in the property supplements as elsewhere in the newspaper. There was no trade-off between editorial and advertising. Advertising features were clearly signposted. Advertisers did not write editorial copy. We never carried advertorials in The Irish Times. The newspaper had occasion late in 2007 to make a complaint to the professional bodies of auctioneers and valuers that some estate agents were providing the property supplement with misleading selling prices. The newspaper took the view that if agents were unwilling to supply accurate information or if the vendors were reluctant to disclose the true selling price, then it would be damaging to the credibility of the newspaper to carry the results. The introduction of the national property register in 2012 was a consequence of this discovery and disclosure in The Irish Times.
This review of editorial policy and the approach to reporting on the property boom in the run-up to the banking crisis proved to be an interesting exercise for me. I was challenged to consider whether in my then role as editor of The Irish Timesjournalists could or should have foreseen the multifaceted nature of the financial crisis, including the property crash and the banking collapse. I do not know what we could have done differently to put ourselves in the position to predict the magnitude of the fall. We reported the news forensically. We challenged the consensus and canvassed all views and published them. The media, as always, were reliant on reporting the views of the specialists, be they Government, the Central Bank, the Financial Regulator or the profession of economists. Journalists were less well-placed than others to make an accurate assessment.
Ciarán Lynch (Cork South Central, Labour)
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I thank Ms Kennedy. I call Ms Maeve Donovan to make her opening statement.
Ms Maeve Donovan:
I thank the committee for the opportunity to discuss the role of the media in the period to which the inquiry refers.
I retired from The Irish Timesin 2010 following 33 years’ service in the company, the final eight years as managing director. As my colleague Geraldine Kennedy addressed the newspaper’s editorial policy in the period in question, I will attempt to answer the committee’s questions on the company, its business model, property-related commercial activity and the editorial-commercial relationship.
The Irish Timesnewspaper is published by The Irish Times Limited and its controlling shareholder is The Irish Times Trust Limited. The Irish Times Limited exists to publish The Irish Times. It is prohibited from providing dividends to its shareholders. Accordingly, all profits are retained in the company. The Irish Times Trust Limited has certain powers under the memorandum and articles to appoint and remove directors of The Irish Times Limited, to call general meetings and the control of significant acquisitions and disposals. The primary role of the trust is to appoint a board which it believes will ensure the company is well run and adheres to its core objects. Thereafter, the trust leaves the board to get on with it. The board has the responsibility of adhering to the main object concerning the quality and independence of The Irish Times.The trust acts a second guarantor or long stop, a responsibility grounded in the trust as a whole.
Editorial policy at The Irish Timesis the responsibility of the board of The Irish Times Limited. In practical terms, day-to-day policy is executed by the editor and team in the context of the memorandum and articles of the company. The core requirement is trust, integrity and balance. As managing director, I had no input into day to day editorial decisions. The managing director is, however, responsible for the overall viability, performance and development of the business, including responsibility for strategy.
Regarding the business model and sources of revenue 2002 to 2007, The Irish Timesbusiness model is a traditional one in the quality newspaper sector in Europe and elsewhere. News gathering and all ancillary activities are funded by a combination of cover price and newspaper sales revenue, subscription revenue and advertising revenue, both print and digital. During the inquiry’s reference period, growing revenues derived from printing external publications. The latter commenced in 2002 with the commissioning of the company’s new printing plant at Citywest. The ratio of advertising to circulation revenue was typically 60:40 on average. This moved up and down depending on the state of the economy. Key advertising sectors, particularly for quality newspaper titles, are property, recruitment, general classifieds including motors and display or run-of-paper advertising.
The classifieds include cars and small ads in various categories. The run-of-paper advertising is largely about retail, food, financial services and so on.
During the reference period, the steady advance of digital media, and hence digital advertising, was a key strategic challenge for the company. This remains the case for The Irish Timesand indeed all print media, as the pace of digital adoption continues to increase.
On the importance of property-related revenues to the overall revenue mix, property is a key pillar of the newspaper’s publishing revenue. The commercial property supplement in Wednesday’s newspaper and the residential property supplement on Thursday are important to readers as well as advertisers. The readers of The Irish Timeshave a strong interest in both residential and commercial property. They are buyers for both categories and many are also property investors. In addition to the dedicated supplements, The Irish Timesalso provides extensive coverage on homes, interiors and related lifestyle content. In an overall context, therefore, property is a key driver of readership both print and online for The Irish Times. From an advertising perspective, The Irish Times's audience is of particular interest to companies trading in the sector. This has been the case for decades and certainly through my entire period at the newspaper. The company’s acknowledged success in the property advertising market has attracted new domestic and UK players into this market and into the sector.
When I came to work for The Irish Timesin 1977, it was the market leader in the property sector. That position was maintained through the 1980s and 1990s, through the reference period, and it continues today. Through the decades there have been new market entrants in both print and digital formats. The market is highly competitive and highly diversified. Globally, the long-standing success of newspapers in the pillar categories of property and recruitment is what gave rise, in large part, to the arrival of standalone digital websites and the resulting disruption of the newspaper’s commercial model.
During the reference period, the company sought to balance increasing exposure to the property sector through a range of diverse activities. The most notable of these was the development of strong external printing revenues from the Citywest plant.
The relationship between the editorial and commercial functions is clearly drawn in the Memorandum and Articles of Association of the Irish Times Trust. It specifies that editorial content in the newspaper shall be "free from any form of personal or party political, commercial religious or other sectional control". That separation is carefully maintained under the stewardship of both the trust and the board. This requirement of the company is deeply embedded in the company's culture. It is heavily emphasised from the induction of new staff onwards, and it is fundamental to the way in which the company operates.
At a macro level, everybody in the organisation understands the importance of advertising to the enterprise. At the micro level, all staff, both editorial and commercial, are aware of the necessity of maintaining the separation of editorial and commercial activities. Customers of the business are also very much aware of this. This does not mean that clients do not sometimes complain, but the role of the business team, especially its management, is to act as a buffer between commercial interests and the producers of editorial content. This practice is regarded within the company as a key asset, and the independence of the newspaper is emphatically stressed when the newspaper is marketed to clients. It is one of the key differentiators of The Irish Timeswithin the Irish newspaper sector.
On engagement in property-related commercial activity, during the reference period The Irish Timesengaged in two notable transactions. The first was the purchase of the website myhome.ie. As early as the late 1990s, The Irish Timessought to secure its position in key markets as revenue started to migrate from print to digital media. Standalone classified sites had started to proliferate, particularly in Europe and the USA. Obtaining a market-leading property site in the sector became a key strategic objective for the company and, hence, for the management team. Along the way, the company developed several digital iterations in the property sector. We had ireland.com/property, and owned the ireland.com portal at that time. We also had irishtimesproperty.comand nicemove.ie. Despite considerable investment and marketing activity, none of these sites proved to be viable competition for myhome.ie, which was the market leader and had grown exponentially from its launch in 2000. Therefore, our company’s intentions turned to growth by acquisition. The myhome.iebusiness became available for sale in 2006. The Irish Times Limited retained NCB as an adviser for the bidding process. There was a competitive process with at least two other bidders involved. The acquisition was unanimously approved by the board of The Irish Times Limited and the transaction was approved by the shareholder, the Irish Times Trust. The website became part of the Irish Times Group and today it remains a key strategic asset of The Irish Timesand trades profitably. The Irish Times has a strong position in both print and digital media in a sector which has substantial revenue streams, which will help to protect the title into the future. Successfully making the migration from print to digital is essential to the survival of The Irish Timesand indeed to all print media.
The second transaction was the sale of the D’Olier Street and Fleet Street premises and the leasing of the Irish Times building in Tara Street from Dublin City Council. During 2005 and 2006, the company had been examining changing work practices and creating an appropriate environment for a changing business. Various options were examined, including extensive remodelling of its listed buildings in D’Olier Street. The cost of redevelopment was prohibitive and inevitably required compromising on the space requirements. Therefore, the decision was made to seek modern accommodation within the city centre, proximate to key sites such as the Dáil. A suitable property was identified and the D’Olier Street and Fleet Street buildings were sold in 2007. The company transferred operations to Liffey House in Tara Street, a facility which was much more suitable for the development of the newspaper and a range of digital business interests. The price achieved, €29.1 million, was considerably higher than the company had anticipated.
Ciarán Lynch (Cork South Central, Labour)
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Thank you very much, Ms Donovan. Just before I bring in the lead questioners, I wish to deal with a couple of matters, including the last subject Ms Donovan dealt with. She said that myhome.iebecame available in 2006, but when was it actually purchased?
Ciarán Lynch (Cork South Central, Labour)
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When in 2007 was that completed?
Ciarán Lynch (Cork South Central, Labour)
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Just generally, was it in quarter one or quarter two?
Ciarán Lynch (Cork South Central, Labour)
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Okay.
Ciarán Lynch (Cork South Central, Labour)
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In 2006?
Ciarán Lynch (Cork South Central, Labour)
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My own research seems to indicate 2007. How much was paid for it?
Ciarán Lynch (Cork South Central, Labour)
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In Ms Donovan's opening address she outlined the rationale for purchasing the website - that this was a platform that The Irish Timeswanted to get into. Those at the newspaper were observing what was happening internationally in the United States and Europe. Was there any commentary in The Irish Timeswith regard to the concentration of €40 million of the company's funds in a particular sector?
Ciarán Lynch (Cork South Central, Labour)
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Sure, yes.
Ciarán Lynch (Cork South Central, Labour)
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My father, his father and his grandfather were printers, so I know all about hot lead.
Ms Maeve Donovan:
The Chairman knows what it was like. In the first few years I was there, it did not change a lot in many ways. The big technological change was probably the move to photo-typesetting in the first instance. That was a huge, traumatic change in the industry. Then, at the end of the 1980s, there was the arrival of colour. That again facilitated growth and change in the business, but the pace of change as we moved into the mid-1990s just took off like a runaway train in the industry globally. A large part of that was to do with the process around the disruption of any industry. It was not unlike communications or the phone industry. People from outside the media industry could see that a large amount of revenue was running through this business. With the developments in technology, they were looking at ways in which they could disrupt that industry and take some of that business away. That was not necessarily immediately apparent in the late 1990s in the Irish market from an advertising perspective.
However, it must be said that The Irish Timeswas always at the forefront technologically. We were first into colour printing and we were first into publishing the newspaper online. The Irish Timeswas one of the first newspapers in Europe to publish online in 1994, which was a very long time ago.
The ad market and the disruption in advertising, however, moved much faster than the reader transition, as it were. We found that the information and data that we were gathering as we moved towards the back end of that decade - these were derived from our contacts internationally with The New York Times, The Guardian, The Daily Telegraphand newspapers throughout Europe and, indeed, on study tours that we-----
Ciarán Lynch (Cork South Central, Labour)
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I want to get to the point as to why the whole medium has changed. Now we see a 24-hour news cycle, Twitter and all of the rest of it. I just want to return to the concentration issue. Some €40 million is quite a substantial sum of money for a company.
Ciarán Lynch (Cork South Central, Labour)
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I am seeking clarity with regard to the purchase and the timeline of it. It commenced in 2006, but Ms Donovan is indicating that it was quarter two of 2007 when it was purchased.
I am sure that both Ms Kennedy and Ms Donovan will talk about it later, what with all of the questioning, but we have heard about the very clear need for separation between what one might call the business end and the journalistic end of newspapers. There may be a requirement at times for the two to talk about what is happening in the real world outside the newspaper as well. It seems to coincide with the purchase of myhome.iethat a very significant article in the witnesses' newspaper, through Professor Morgan Kelly, said that the property market was going to crash. The newspaper was investing in a website that was promoting a product that was going to go into a very, very serious time. Was there any awareness of that during the discussion to purchase the website?
Ciarán Lynch (Cork South Central, Labour)
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What I am talking about is the valuation that was actually put on it. Certainly, somebody can see the rationale for a need to diversify, but the valuation-----
Ms Maeve Donovan:
Of course. Let me deal with the price. We were, as I said to the Chairman, professionally advised. There were other bidders, so it was a competitive bidding process. Indeed, we did make an earlier bid that was turned down. However, the view that we took was that we were buying a very profitable business with very significant revenue streams that were not being affected by transition. We were taking a very long view. myhome.ieis a critical part of The Irish Timestoday. It will be in ten years and it will be in 20 years.
Ciarán Lynch (Cork South Central, Labour)
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On reflection on that price that was paid back in early 2007, how does Ms Donovan view the purchase price now?
Ciarán Lynch (Cork South Central, Labour)
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Would Ms Kennedy like to offer a view on the whole purchase?
Ciarán Lynch (Cork South Central, Labour)
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Was it the purchase price Ms Kennedy had the reservations about or the acquisition of the site?
Ciarán Lynch (Cork South Central, Labour)
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Okay.
Ms Geraldine Kennedy:
I was in favour of the policy of diversification. There was informed speculation at that time that the underbidder was The Guardian. There certainly was a rationale not to allow one's major revenue base to walk out of Ireland to another newspaper in Britain at the time. I had reservations about the purchase because of the price. Any editor worth his or her salt would like to see money going into the development of the newspaper.
Ciarán Lynch (Cork South Central, Labour)
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I thank Ms Kennedy. We will move on. The first questioner up is Senator Barrett.
Sean Barrett (Independent)
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I welcome our two visitors this afternoon. If I may, there may be an identity issue on page 4. We will have the Financial Regulator in later, but I do not think that he was ever chairman of The Irish Times. That is stated on page 4: "As an aside, the Chairman of the Board of The Irish Times Ltd was the Financial Regulator".
Sean Barrett (Independent)
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I thank Ms Kennedy, because we will be talking to some of those people.
Ciarán Lynch (Cork South Central, Labour)
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It was just to clarify that. I thank the Senator very much.
Sean Barrett (Independent)
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The sentence above that, if I may, states: "it is fair to say that the policy of The Irish Timeswas critical of both the establishment and operation of the Financial Regulator and IFSRA, believing that they were not independent of the Central Bank." That was quite a controversy when the McDowell report was opposed by the Department of Finance and the Central Bank itself. What were the misgivings ofThe Irish Timesat the time?
Ms Geraldine Kennedy:
It was not sufficiently independent. The Senator probably knows where it operates. It operates on the very same floor in the very same building of the Central Bank. It was known to have been created to do what was called soft-touch regulation. If one was going to bother appointing a regulator at all, one would give it authority and powers. We did not know then how much it would have been needed. I put that point in here because I anticipated that the committee would ask how The Irish Timescould be independent with the chairman of the regulatory authority on its board. We were independent. That is a very good example for the committee. He would not have been that happy with these views and he would have spoken to me, saying that we had got all that wrong and everything like that, yet we maintained our position in the interests of our readers.
Sean Barrett (Independent)
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Did Ms Kennedy follow that up afterwards? That is part of the narrative that we have to look at. This body was set up in somewhat controversial circumstances. Did The Irish Timesfollow how the story involved after 2003 until the night of the guarantee?
Ms Geraldine Kennedy:
It is quite clear from the Peter Nyberg report - I cannot do any better than him - that, when he listed the factors that had to come together to create a financial crisis of the scale we got, the work of the Central Bank, the regulator and the Government are the top three things that he mentioned. The roles of the Parliament, strangely enough, and the media are the last two.
Sean Barrett (Independent)
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Ms Kennedy mentioned at the top of page 5 that she gave Simon Carswell the space to become "a full-time specialist in covering the banking crisis". What concerns did Simon Carswell express to Ms Kennedy to achieve that valued status subsequently? He was in here as a witness a few weeks ago, as she knows. What concerns was he bringing to her that she felt that step should be taken?
Ms Geraldine Kennedy:
At that particular time - I had never seen it in my life before - practically every lead story on every front page was a financial or banking story of some type or other. I have never seen the business department of a newspaper having to work so hard or so many extra pages having to be put into it because of the volume of news in that particular area. It is most unusual. One would often see it in politics, health and other areas, but not in the business and finance area.
Sean Barrett (Independent)
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Did Mr. Carswell have intuition about two banks that we know subsequently went broke or did he feel that-----
Sean Barrett (Independent)
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-----the regulation of the sector was defective? He must have had some concerns if he was able to impress Ms Kennedy sufficiently to give him that status.
Ms Geraldine Kennedy:
His title was "finance correspondent" but, as it happened, he was spending all of his time reporting on the banks, and obviously doing it very well because he was the journalistic specialist that the committee called in here to address it on the issue. He did have concerns. What is interesting as well is that, because he wanted to investigate it further, I freed him up from other markings. He got a paid leave of absence to write the books that he spoke to the committee about and all that. It was a very worthwhile use of resources by The Irish Times.
Sean Barrett (Independent)
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The Irish Timesalso had a very important interview with Milton Friedman by Conor O'Clery, where a Nobel prize winner was extremely concerned about the design faults in the euro. Was that story followed up by the newspaper? It was certainly a scoop to get it at the time, but did it influence Ms Kennedy afterwards as this crisis developed?
Ms Geraldine Kennedy:
I do not remember the detail of it and I do not have it before me now. I remember him getting that interview. It would have been one of the areas where we would have demonstrated different views in The Irish Times. One has to consider, I think, the position that I was in as editor as the whole story involved. It was sort of moving in stages. There was no point where I would have said there would be a crash or there would be a soft landing. In any case, I would not have the expertise to make that personal judgment myself, but what we were very careful to do was to give every view on the issue and give everybody a say. There was nobody who offered opinions to the opinions page or other pages of The Irish Timeswho was not allowed to express a view.
Sean Barrett (Independent)
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Will Ms Kennedy tell us the background to the famous article by David McWilliams? Did she know it had been rejected by other publications?
Sean Barrett (Independent)
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I am getting my gurus mixed up. It was definitely Morgan Kelly.
Ms Geraldine Kennedy:
David McWilliams gets a lot of credit but, as I recall, he predicted the crash in 1999 and it did not happen until eight years later. That is important. If one says something often enough, it will happen. If one were to keep saying now that Fine Gael and the Labour Party would form the next Government or Fianna Fáil and Fine Gael or Sinn Féin and somebody else, one is bound to get something right at some time. Morgan Kelly offered an article in December 2006 to the business section of The Irish Timespredicting a crash of the scale of between 40% and 60%. Peter Murtagh, who is the opinion editor - I hope the Chairman does not mind me mentioning his name - contacted Morgan Kelly subsequently and invited him to write other material because he was the only one at that time expressing that view.
It is my clear understanding that Morgan Kelly's article was turned down by the Sunday Business Post and one of the Independent newspapers, either the Irish Independent or Sunday Independent. I cannot say which one it was and I do not know whether members asked the Irish Independentteam about that in the previous session because we were outside the committee room at the time.
Ciarán Lynch (Cork South Central, Labour)
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The matter was raised this morning.
Sean Barrett (Independent)
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In the final sentence of her opening statement, Ms Kennedy noted that journalists "were less well-placed than others to make an accurate assessment." That is a very pessimistic statement.
Sean Barrett (Independent)
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I could probably maintain that I did. Is this an abdication by the Fourth Estate? That is what I am concerned about. The Irish Timeshas a track record, having got Milton Friedman and Morgan Kelly and it also got a strong line on the McDowell report.
Ms Geraldine Kennedy:
There was a very interesting article written by my predecessor, Conor Brady, following a conference in Brussels which investigated newspaper coverage of the crash and the financial crisis. Mr. Brady wrote an article which we published in The Irish Times. It reflected exactly what Senator Barrett is asking. His conclusion in the article was that maybe we had so many specialists that we did not join the dots together. Maybe that is the case but if one looks back into recent history, is that not the case also with the child abuse crisis, the role of the Catholic Church, the Magdalen laundries, Letterfrack and everything? It is grand to say in hindsight that one knew everything when the jigsaw fits into place years later. I believe that is the position we are in.
Sean Barrett (Independent)
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Some of the evidence given yesterday and the previous day suggested that journalists are under too much pressure from public relations companies, they do not have time to do independent research and they tend to ask the incumbents about what is taking place in a sector rather than seeking out contrarian views. Was that the reason Ms Kennedy was feeling pessimistic? Would most journalists prefer to be in public relations rather than being investigative journalists?
Ms Geraldine Kennedy:
Most journalists want to be investigative journalists at the age of 21, if possible. As a breed, they do not like public relations people but PR people are part of life today. I am sure the committee has a PR person. Look at all the Dáil questions that are asked about how much the Health Service Executive spends every year. Look at how much Irish Water is spending to communicate on behalf of the Government. PR people are part of life and any journalist worth his or her salt will deal with them.
Sean Barrett (Independent)
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Are the living standards of journalists much lower now than they were ten or 15 years ago? In the Bowes pub kind of setting it was certainly the story that one building society in particular went out of its way to recruit journalists and give them mortgages. Would such privileged status for journalists have influenced coverage of the sector?
Ms Geraldine Kennedy:
I do not believe so because most of the journalists who would have got their mortgages from that particular company at that particular time would have their mortgages paid now. In other words, it was happening in another era.
I wish to raise another issue, if I may be allowed, arising from yesterday's proceedings and Mr. Harry Browne's presentation. I have some respect for Mr. Browne's views because he worked in The Irish Times. However, I am also conscious and aware of his antipathy towards The Irish Timesover the circumstances of his departure. That being said, he made a reference yesterday which could be grossly misinterpreted by the committee when he suggested to Senator MacSharry or perhaps Deputy Michael McGrath that there was some big property scam in The Irish Timesand the Senator or Deputy asked whether this meant they got bricks and mortar.
Michael McGrath (Cork South Central, Fianna Fail)
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The exchange was with Senator MacSharry.
Pearse Doherty (Donegal South West, Sinn Fein)
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Mr. Browne did not name any institution.
Ciarán Lynch (Cork South Central, Labour)
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I will allow Ms Kennedy to address the issue before moving on.
Ms Geraldine Kennedy:
I will not name anybody but I would not like members to think that happened during the boom because it did not. It happened in the 1970s and if the inquiry is interested in the issue, it was written about by Frank McDonald, an expert from The Irish Timeswhom the committee also called before it, on page 216 of his book, The Destruction of Dublin. This concerned events that took place in the early 1970s. As a result of this controversy, new ethics guidelines were agreed with the National Union of Journalists and introduced in The Irish Times.
Sean Barrett (Independent)
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One of the current correspondents of The Irish Times, Professor John FitzGerald, informed the inquiry that if he wrote a quarterly report on the economy which may have been somewhat pessimistic, someone who he referred to as a nervous Nelly in the Department of Finance would ring him up to complain. Did Ms Kennedy ever receive those kinds of telephone calls?
Ms Geraldine Kennedy:
Yes, one could not be editor of The Irish Timeswithout getting telephone calls and pressure from some sector or other every single day - from politicians, the late Brian Lenihan, not so much from bankers, from representatives of churches, judges, ambassadors and from every sector. The question is whether one would allow that to influence the policy of the newspaper and I can categorically say that I never did.
Sean Barrett (Independent)
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Was the property sector among the sectors that would make telephone calls to Ms Kennedy?
Ms Geraldine Kennedy:
Yes, they would not make telephone calls to me but I am aware that many telephone calls were made to my colleague, Ms Donovan, by the property sector about various coverage in the property supplement as well as in the main newspaper. To illustrate the issue, I remember Pat Rabbitte saying at one stage or other that the article by Morgan Kelly rocked the foundations of the State. People from the property sector were saying it would rock the foundation of The Irish Times, we would never get an advertisement again and it was damaging the credibility of the country. I became aware of this but it did not stop me from publishing Morgan Kelly again.
Sean Barrett (Independent)
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Ms Kennedy stated, "The same editorial standards applied in the property supplements as elsewhere in the newspaper." The whole tone of the property supplement is so saccharine and gushing that it must be different from the rest of the newspaper.
Ms Geraldine Kennedy:
No, it is not and very strict rules apply in it. The Senator could be confusing the advertisements with the editorial material. There has to be an editorial balance of about 40% and 60% between editorial and advertisements. Often, the poor old property editor would be pulling out his or her hair - there were two of them in my time - on a Tuesday when more and more ads would come in during the years of the boom because the supplement would have to be increased by two pages and these would have to be filled. A lot of critical stories were published in the property supplement as well. I think it was Dr. Mercille who asked a question yesterday about when The Irish Timeshad ever covered affordable housing. I have ten editorials covering affordable housing and I can leave them with the inquiry if members wish. The people who wrote about affordable housing, half of whom wrote about it in the property supplement, included Dr. Garret FitzGerald, Fintan O'Toole and Des Geraghty, who was head of an affordable housing association at the time.
These issues were tackled in the property sector as well, so much so that a lot of complaints were made to the property sector.
Sean Barrett (Independent)
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Was that in the main body of the paper?
Ciarán Lynch (Cork South Central, Labour)
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We will come back to the Senator in a moment.
Eoghan Murphy (Dublin South East, Fine Gael)
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Reference was just made to contact from interests outside the paper. Was Ms Donovan ever contacted by someone senior in government or a senior Government representative over content carried in the paper?
Eoghan Murphy (Dublin South East, Fine Gael)
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What about business interests outside of that?
Ms Maeve Donovan:
Of course. My job was to head them off at the pass. I have lost count of the number of times over the years that various people from all walks of life and strands of business would contact me complaining about various aspects of the paper. It could be content, positioning, price or any one of a range of factors. In truth, where content was concerned my response essentially would be to listen. A lot of people simply wanted to vent and decided "I am going to ring The Irish Timesand give them hell". It was to my desk that they came.
Eoghan Murphy (Dublin South East, Fine Gael)
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What about from someone senior, perhaps in the Government or with a particular interest, or someone well known? Is there a code for dealing with that complaint? Would management let editorial know and would there be a discussion?
Ms Maeve Donovan:
I suppose the code is such that we do not allow it to interfere in any way with content. We start from that process. As I said, my instinct was generally to let them vent and talk it down. If it was of huge interest, clearly we would have a conversation about it, but we are operating within a context in which there are no circumstances whatever in The Irish Timeswhere there can be intrusion into the editorial space. I think that is very well understood and, unlike with other newspapers, it is a codified process. You know from the first day you walk into D'Olier Street - as it was then - what the rules of the game are. The Deputy might consider that from a commercial perspective this was a negative, but I have always regarded it as a positive. There was such clarity around it and our advertiser audience was very well informed about it as well. It adds strength to the paper.
Eoghan Murphy (Dublin South East, Fine Gael)
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Ms Donovan said in her opening statement:
the independence of the newspaper is emphatically stressed when the newspaper is marketed to clients. It is one of the key differentiators of The Irish Timeswithin the Irish newspaper sector.
Does this mean other titles are not stressing this, or do not have this independence?
Eoghan Murphy (Dublin South East, Fine Gael)
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I think Ms Donovan was commenting on them, though. In her opening statement she said it was a key differentiator between the paper and other titles.
Eoghan Murphy (Dublin South East, Fine Gael)
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In differentiating The Irish Timesfrom other papers by making this so explicit, Ms Donovan is stating that other papers do not make it explicit.
Eoghan Murphy (Dublin South East, Fine Gael)
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How would that independence, or the way that the paper makes its independence explicit, make Ms Donovan view other papers?
Eoghan Murphy (Dublin South East, Fine Gael)
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In terms of independence?
Eoghan Murphy (Dublin South East, Fine Gael)
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Ms Kennedy mentioned that she had been contacted by senior Government people. Would she like to elaborate on any of those contacts? Were they in respect of particular articles or particular coverage of events?
Eoghan Murphy (Dublin South East, Fine Gael)
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Was Ms Kennedy ever contacted by the Taoiseach or by a Cabinet Minister?
Eoghan Murphy (Dublin South East, Fine Gael)
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What would be the purpose of those contacts?
Eoghan Murphy (Dublin South East, Fine Gael)
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No overt pressure was put on the paper to change an opinion or position or to write a certain way?
Ciarán Lynch (Cork South Central, Labour)
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Next question, Deputy.
Eoghan Murphy (Dublin South East, Fine Gael)
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Coming to Ms Kennedy's relationship with the board, the statement was made yesterday that the ownership structure of a newspaper had a direct impact on the editorial decisions taken. The Irish Timesis unique in that it is managed by a trust - that is the long stop - but it also has the board. Does the board have a say over editorial policy?
Ms Geraldine Kennedy:
It does, yes. The way it is expressed is that the board owns editorial policy. I gave the Deputy the principles of editorial policy as per the memorandum and articles of association. On an operational basis, it is up to the board to see that they are implemented. I even found this strange myself. In a bit of research I did before coming before the committee, I had somebody go back through all the board reports for the inquiry period of 2002-07 and editorial policy on the financial crisis and the property market. The property bubble, or however the Deputy would like to define it, was never raised or discussed.
Eoghan Murphy (Dublin South East, Fine Gael)
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Those are formal notes taken from board meetings.
Eoghan Murphy (Dublin South East, Fine Gael)
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Informally, would there have been relationships or contact?
Ms Geraldine Kennedy:
It was not ever discussed informally at the board. It was not that it was not minuted - it was never discussed at the board of The Irish Times. Individual board members at different times might have asked why I was not doing this, that or the other, and I would say to them "Well, that is not the policy that I intend pursuing at this time." There was a point, for example, at which the new chairman, David Went, asked why I would not write an editorial supporting the banks and I said I had not yet done so because the haircut had not been announced and I was waiting to see how much taxpayers would have to pay. I would not be doing an editorial in the interest of the banks but in the interests of our readers and taxpayers. I basically said that if he had any issue with that we could have a discussion on the board about it. There never was a discussion.
Eoghan Murphy (Dublin South East, Fine Gael)
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Regarding the management-editorial relationship, Ms Kennedy talked about a partnership of equals between herself and the managing director. As managing director, Ms Donovan had no input into the day-to-day editorial decisions. Would she have input into general editorial policy?
Ms Maeve Donovan:
Insofar as editorial policy is dictated by the memorandum of the trust, that is a set issue. To clarify a little bit how editorial policy flows from the board, it is set in the Memorandum and Articles of Association of the Irish Times Trust. That is devolved for discussion where there would be major issues, addressing policy to the board of Irish Times Limited. However, the board, in large part, allows those issues to devolve to the editor and the editorial team. On a day-to-day basis, that is how it works. The structure in The Irish Timesgives a more clearly defined and higher level of protection and independence to the editor than might be the case in other structures.
Eoghan Murphy (Dublin South East, Fine Gael)
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As editor, would Ms Kennedy be involved in strategic decisions for the paper?
Ms Geraldine Kennedy:
Yes, I would. This system actually works very well and is very well understood in The Irish Times, in case we are not explaining it correctly. At board meetings I have a say, like any other member of the board, as a director on strategic decisions. I would express a view and all that, just as Ms Donovan could express a view if the board was discussing editorial policy. One thing the board spent a very long time discussing - it came up ad infinitumat every single board meeting for a period - was the establishment of the Press Council and the Press Ombudsman. Every member of the board, including me, would express a view on it. I was delighted with that - it is great to be able to tease something out and get support on something.
Eoghan Murphy (Dublin South East, Fine Gael)
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When it came to strategic decisions, such as introducing or expanding a property supplement, introducing a new supplement or a commercial acquisition, would the editor have a role in that decision?
Eoghan Murphy (Dublin South East, Fine Gael)
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My understanding is that the decision to purchase myhome.iewas unanimous on the board.
Eoghan Murphy (Dublin South East, Fine Gael)
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Did Ms Kennedy have an issue with the purchase of myhome.ie?
Eoghan Murphy (Dublin South East, Fine Gael)
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But there was no vote.
Eoghan Murphy (Dublin South East, Fine Gael)
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So Ms Kennedy supported the decision.
Eoghan Murphy (Dublin South East, Fine Gael)
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Did Ms Kennedy not think of calling a vote to see-----
Ms Geraldine Kennedy:
No, I did not. I did not feel strongly enough about it because there was a case for diversifying in The Irish Timesand property was a big revenue stream for the newspaper. I certainly would have been very conscious of how dangerous it would be to the future of The Irish Timesif The Guardianwere to succeed in buying the main property website in Ireland at a stage when newspapers were in transition and in a move to a digital world.
Ms Maeve Donovan:
I wish to give the Deputy some information which might help to clarify how this particular aspect would work. First, as Geraldine has said, she would have had reservations and would have liked to have more money to spend on other things at the time. However, her opposition was not to what was accepted as the problem, namely the migration from print to digital. I will give the Deputy an earlier example that might illustrate this for him. The job of the editor and the entire journalistic team is very much focused on the issues of today and the immediate future. It is very different for the business. If we go back to the end of the 1980s when The Irish Timesintroduced colour printing, we had a very eminent editor, Mr. Douglas Gageby.At that time, despite the investment, Mr. Gageby said that there would not be colour on the front page of the newspaper until Ian Paisley cut the tape on the Border. I can tell the Deputy that within months there was colour from one end to the other of the editorial pages. It took time for him to be sold on the idea. That is the issue with strategic decisions. The business must look at strategic issues over a very long period of time.
Eoghan Murphy (Dublin South East, Fine Gael)
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I am going to run out of time so I will stay with Ms Donovan, if I may. She described the acquisition of myhome.ieas a natural movement from print to digital. Is that how she sees it? In terms of the paper moving to digital-----
Ms Maeve Donovan:
What we see is a block of revenue that has supported press for decades suddenly appearing in a different field which has nothing to do with print media. The very important point about myhome.ieis that it is a digital business. It is a stand-alone business and it does not have any editorial content or position. So it is a drain from our revenue.
Eoghan Murphy (Dublin South East, Fine Gael)
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It is very different from a property supplement in a newspaper.
Eoghan Murphy (Dublin South East, Fine Gael)
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It is a property-related commercial activity, as Ms Donovan said in her opening statement.
Eoghan Murphy (Dublin South East, Fine Gael)
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In terms of the independence of the paper, was there ever a fear that an over-reliance on property and moving into this new commercial activity would undermine the actual or perceived independence of the paper?
Ms Maeve Donovan:
No there was not because what allows us to put feet on the ground in China, Moscow or anywhere else in the world is the revenue we derive from areas such as property. It is very important to say, in the context of The Irish Timesstructure, that we do not have access to shareholder funds. We finance our operation ourselves out of our own earnings.
Eoghan Murphy (Dublin South East, Fine Gael)
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Was there a discussion among senior editorial staff or management in the paper that this particular move into the property sector could undermine the paper?
Ms Maeve Donovan:
Never that it undermines the paper, no. There was a lot of discussion on it but largely around the price, as one would expect. As I said earlier, I wish to God we had paid less for it. Unfortunately, if we had not paid what we did pay, we would not have it and it is critical for us.
Eoghan Murphy (Dublin South East, Fine Gael)
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What impression did making such an acquisition while also publishing articles in the paper which ran contrary to the consensus at the time make on the readership of The Irish Times? They were reading the views of Professor Morgan Kelly on a complete crash in the property sector while at the same time, The Irish Timeswas making a major property-related acquisition.
Eoghan Murphy (Dublin South East, Fine Gael)
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Did anyone in The Irish Timespublish an article criticising the purchase of myhome.ie?
Eoghan Murphy (Dublin South East, Fine Gael)
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It was announced as news but did anyone write any critical comment on it?
Eoghan Murphy (Dublin South East, Fine Gael)
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I thank Ms Kennedy for that clarification.
Ciarán Lynch (Cork South Central, Labour)
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Last question, please, Deputy.
Eoghan Murphy (Dublin South East, Fine Gael)
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The website myhome.iehas its own business interests. How are they managed, separate from the newspaper?
Eoghan Murphy (Dublin South East, Fine Gael)
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myhome.iehas its own business interests in terms of-----
Eoghan Murphy (Dublin South East, Fine Gael)
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Yes, but it also sponsors particular events, television programmes-----
Ms Maeve Donovan:
Yes, it does. It operates independently. Actually, for many years it lived in a different place as well. It is now, for cost reasons, based within the same building but it operates separately. Having said that, there are synergies on the sales and technology side but not at all on the content side because, as I have said already, there is no content in myhome.ie.
Eoghan Murphy (Dublin South East, Fine Gael)
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I take it that synergies on the sales side means that sales staff are working for both myhome.ieand The Irish Times.
Ciarán Lynch (Cork South Central, Labour)
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I now call Deputy Joe Higgins.
Joe Higgins (Dublin West, Socialist Party)
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Substantial advertising revenues came in toThe Irish Timesfrom property developers, commercial and home builders and so forth between 2002 and 2008. Would Ms Donovan have a rough estimate of how much money was taken in from that kind of advertising?
Joe Higgins (Dublin West, Socialist Party)
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I ask Ms Donovan to give us a rough figure, in the millions, for what came in during those six years. We do not have time to go into each year, unfortunately.
Joe Higgins (Dublin West, Socialist Party)
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How much in 2006?
Joe Higgins (Dublin West, Socialist Party)
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That would nearly be €100 million over five or six years.
Joe Higgins (Dublin West, Socialist Party)
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In any case, it is tens of millions of euro.
Joe Higgins (Dublin West, Socialist Party)
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Ms Kennedy knows that before political parties were subject to limits on the donations they could receive, beef barons, property developers and banks made substantial donations to them. Those same political parties loudly protested that those donations had absolutely no effect on their policies or how they might deal with issues in Government but nobody believed them. Should they believe newspapers when they say that massive advertising revenue of that order would have absolutely no influence on how those newspapers dealt with the property bubble, for example, and the issues that it raised regarding developers, speculation, profiteering and so forth?
Ms Geraldine Kennedy:
I think they should believe us and I will explain why. Ms Donovan has given a figure of €100 million over six years. In the year 2005, for example, in the annual accounts of The Irish Times, it cost €45.13 million to produce the paper. The editorial budget of The Irish Timeswas in or around the €30 million mark for the nine years that I was there. That is a huge editorial budget which enabled us to have a correspondent in London, Washington, Paris, Berlin, one in Moscow for a while and one in China. We had two correspondents in Northern Ireland during that decade but there is only one there now. That all costs an awful lot of money but it is part of the role of The Irish Times, which is to give an independent view of world events as a neutral country. TheIndependent, our main competitor, has no foreign correspondent at all. What one reads in that paper is British newspapers' views on things like the Iraq War, to which we sent reporters. Given that a newspaper has to finance itself either by selling newspapers or advertising, I was delighted that we got a lot of money from property because it enabled us to provide wonderful coverage.
Joe Higgins (Dublin West, Socialist Party)
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The research that the inquiry team has done found that between 1996 and 2006, the price of an ordinary home increased each year, over ten years, by the equivalent of the average industrial wage. These were astonishing increases, resulting in a young generation being skewered economically by what was going on in the property market.
Mortgage payments were shooting up putting huge pressure on people, the period of the mortgage increased from 20 years for their parents to 40 years and by common consent there was rampant speculation in land involved and profiteering. Did Ms Kennedy ever launch an initiative of investigative journalism in The Irish Timesto uncover the rampant profiteering and speculation that was going on in the housing industry during that period?
Ms Geraldine Kennedy:
I think I did. Yes. Mr. Frank McDonald appeared before the committee. I asked him to do a series on the builders, which was subsequently turned into a book, on what they own, what they get, how much they are worth, what they do, the sites they own, the sites that are undeveloped. He did that, not once but twice, during the boom and after the boom, on who owned Ireland. I would regard that as investigative journalism. Nobody else did it and it was done by Mr. Frank McDonald.
Joe Higgins (Dublin West, Socialist Party)
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For example in-----
Ciarán Lynch (Cork South Central, Labour)
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The Deputy will shortly come to his final question.
Joe Higgins (Dublin West, Socialist Party)
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In 2006 the price of an average new home in Dublin was €375,000. Did Ms Kennedy conduct an investigation on how much of that would be for bricks, mortar, labour and by common consent a substantial amount, perhaps 50%, for profit as well? Does she ever remember-----
Ciarán Lynch (Cork South Central, Labour)
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This is the Deputy's last question.
Joe Higgins (Dublin West, Socialist Party)
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My last question is in relation to how Ms Kennedy covered the aftermath of the property bubble. Research by Dr. Julien Mercille, who appeared before the committee yesterday, found a strong preference for fiscal consolidation or austerity policies in The Irish Times. For example, his research outlined that 57% of all opinion articles and editorials in The Irish Timesdiscussing Irish Government budgets between 2008 and 2013 supported austerity with opposition only to specific cuts voiced by 15%. Does Ms Kennedy think that is balanced journalism to give that massive support, on the face of it, to austerity with all the effects on the victims of the bubble and to support it in that way?
Ms Geraldine Kennedy:
I listened to Dr. Mercille with great interest yesterday. Without doubt he was the finest conspiracy theorist I have heard in a long time. I was disappointed that his material was not evidence based. He gave one fact in his submission which was that there 40,000 articles written in The Irish Timesabout economic policy and the property boom and only 78 about affordable housing. That is absolutely wrong. It is very easy to press a button and get "property bubble" without taking into account all the other formulations of expressing that same phenomenon. Between the years 2008 and 2013 the country was banjaxed, it was bankrupt. Unless we want it to be Greece, one had to try to bring the country out of the mire. I noted yesterday that he seemed to support Argentina and in something else I read about him he supported-----
Joe Higgins (Dublin West, Socialist Party)
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Does Ms Kennedy dispute the figures and the percentages that he outlined in terms of the support for----
Joe Higgins (Dublin West, Socialist Party)
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But Ms Kennedy said that his contribution was not facts based and now she says she does not know.
Ms Geraldine Kennedy:
I do not know as I did not study that period because the terms of reference of the inquiry given to me were for 2002 to 2007. His figures were for 2008 to 2013 which is beyond my period as editor and I did not study that before coming in here. I will say that I believe, personally, and would probably have pursued the policy as editor, that there was very little option for Ireland unfortunately but to try to get its house back in order. It required great sacrifices by ordinary people.
Joe Higgins (Dublin West, Socialist Party)
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Yes. In other words, Ms Kennedy supports it. Did she support then the bailout of the financial markets rather than the people who were victims?
Joe Higgins (Dublin West, Socialist Party)
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How is that balanced journalism?
Ciarán Lynch (Cork South Central, Labour)
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I am going to move on.
Ciarán Lynch (Cork South Central, Labour)
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I am not going to facilitate that. I am moving on. I call Deputy Pearse Doherty.
Pearse Doherty (Donegal South West, Sinn Fein)
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Cuirim fáilte roimh na finnéithe. Ms Kennedy has made a number of comments in respect of previous witnesses who have appeared before the committee. There was some laughter when she talked about David McWilliams and his predictions. Does she believe David McWilliams was wrong in his predictions?
Pearse Doherty (Donegal South West, Sinn Fein)
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Was he right at that point?
Pearse Doherty (Donegal South West, Sinn Fein)
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Sorry, was it right at that point?
Pearse Doherty (Donegal South West, Sinn Fein)
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I am not asking Ms Kennedy to give me her opinion on Mr. McWilliams himself. I am asking about his analysis. When Mr. McWilliams predicted that there would be a property crash, does she believe he was right?
Pearse Doherty (Donegal South West, Sinn Fein)
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Does Ms Kennedy believe he was right in predicting a property crash at that point in time?
Pearse Doherty (Donegal South West, Sinn Fein)
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In hindsight we know that the property crash happened and we relied on Professor Kelly's documentation in the past and we have had Mr. McWilliams before the committee. At what point does Ms Kennedy believe that Mr. McWilliams was correct in his analysis that if the trends continued there would be a property crash?
Pearse Doherty (Donegal South West, Sinn Fein)
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Okay. In relation to one of the other witnesses who appeared before the committee, Mr. Harry Browne, Ms Kennedy somehow suggested - correct me if I am wrong - that the evidence he gave to the committee could be coloured by the way he left The Irish Times? Is that correct?
Pearse Doherty (Donegal South West, Sinn Fein)
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In relation to the evidence he provided to the committee-----
Ciarán Lynch (Cork South Central, Labour)
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Deputy-----
Pearse Doherty (Donegal South West, Sinn Fein)
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In relation to the evidence he provided, what evidence in particular would Ms Kennedy like to dispute at this committee?
Pearse Doherty (Donegal South West, Sinn Fein)
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Does Ms Kennedy have the quote? I have just looked at the quote that we have and it is already online. He mentioned that in the earlier part of my career-----
Pearse Doherty (Donegal South West, Sinn Fein)
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He did not mention the institution. He mentioned that it was dealt with in-house. In terms of the period of the inquiry, he referenced somebody who was let go in a paper that no longer exists.
Pearse Doherty (Donegal South West, Sinn Fein)
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That is fair enough if that was Ms Kennedy's impression.
Pearse Doherty (Donegal South West, Sinn Fein)
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In relation to myhome.iewas the contract that The Irish Timesentered into for €40 million in its totality?
Pearse Doherty (Donegal South West, Sinn Fein)
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That was the complete liability that The Irish Timeswas entering into.
Pearse Doherty (Donegal South West, Sinn Fein)
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In her evidence, Ms Donovan welcomed the opportunity to clarify some misleading reports. The reports were that €50 million was the potential payment for myhome.ie. Is that correct or not?
Pearse Doherty (Donegal South West, Sinn Fein)
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Okay.
Ms Maeve Donovan:
I think it is important, if the Deputy does not mind me saying so, to say that this is not a territory, as we all know to our cost, where we can toss around €10 million either way as if it were nothing. We paid €40 million. Had it been different times and the earnings had been very significant, we might well have looked back and paid another €10 million five years later. That did not arise and, clearly, it will not arise now.
Pearse Doherty (Donegal South West, Sinn Fein)
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The national broadcaster reported on the purchase of myhome.iethat The Irish Timespaid €40 million upfront with an additional provision of €10 million if certain targets were reached. Is that report accurate?
Pearse Doherty (Donegal South West, Sinn Fein)
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This was in the national broadcaster at the time of the purchase of myhome.ie.
Pearse Doherty (Donegal South West, Sinn Fein)
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The key thing is that The Irish Timeswas willing to enter into potentially purchasing myhome.iefor €50 million.
Pearse Doherty (Donegal South West, Sinn Fein)
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That is the contract that was entered into. If targets were met, that would be the liability.
Pearse Doherty (Donegal South West, Sinn Fein)
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Based on the turnover profit of myhome.ie, how many years would it have to accrue that profit for The Irish Timesto break even?
Ms Maeve Donovan:
I will not discuss at this stage the figures of the business that we acquired. That certainly is confidential to The Irish Times. What I would say is that it was a very profitable business at the time and we took the view that it was a very long-term acquisition for us because of the pace of migration to digital. It was our expectation that the primary source of revenue in the long run, not just in that area but potentially others as well, would be digital rather than print and that was the threat we were trying to mitigate.
Pearse Doherty (Donegal South West, Sinn Fein)
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Some of these accounts are published. Anyone can pay a few euro to look at these after-tax profits in the companies register so it is not a huge state secret as to what certain companies have in terms of profits. There have been reports, for example, that it would take 25 years at current profits just simply to break even. The reason I am trying to get at this is not about the profitability of the company-----
Ciarán Lynch (Cork South Central, Labour)
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The Deputy is running out of time so I need to push him to a question.
Pearse Doherty (Donegal South West, Sinn Fein)
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In the purchase of myhome.ie, was it or was it not built into the analysis that property prices would have to be maintained or at least increased, and if there was a major slump, that investment would have gone belly-up? I know Ms Donovan has said on the record before, when she was asked if she regretted this investment, that she did not. Are they the same sentiments she has with myhome.ietoday?
Ms Maeve Donovan:
Entirely, because it should be remembered that what we were buying was the migration. Our expectation was that as the business moved steadily out of print and into digital, it was critical for us to have a position there. I will give the Deputy an example that might be of use in setting this in context, specifically about the pace of change. There is an article in this morning's edition of The Irish Timesbusiness pages that the Deputy might want to have a look at. It says that in the past 12 months, €1 of every €3 spent on digital has been spent on mobile. For a business like myhome.ie, if there were no mobile platform, that money would be going ever faster. It comes back to this issue that we must position ourselves with future technology if we are to protect The Irish Timesfor the long haul, and that, fundamentally, is what myhome.iedoes and will do long into the future.
Kieran O'Donnell (Limerick City, Fine Gael)
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I welcome Ms Kennedy and Ms Donovan. I want to take up the issue of myhome.ieand clarify a number of points. It was reported at the time that myhome.iehad profits of about €2.5 million annually and a turnover of about €6 million. That is a profit of about one twentieth of what was paid for it and turnover of about one eighth, which would appear-----
Kieran O'Donnell (Limerick City, Fine Gael)
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At the time, the shareholding was controlled by three of the top estate agents and one of the top banks. This company was growing and was suddenly put up for sale in 2006. We now know that July 2006 was a watershed in terms of the property market. The Irish Timesbought myhome.ieduring 2006. When Ms Donovan was considering the purchase of myhome.ie, did she reflect on the fact that three of the top estate agents and one of the top banks were the principal shareholders in myhome.ieand that they were selling out at a time when the market clearly was reaching its peak? The Irish Timesbought at the peak of the market.
Kieran O'Donnell (Limerick City, Fine Gael)
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It looks like The Irish Timesbought in August 2006-----
Ciarán Lynch (Cork South Central, Labour)
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The question has been made so will Ms O'Donovan respond, please?
Ms Maeve Donovan:
There are two things. The business of myhome.iewas growing like the clappers for two reasons. One was because the market was booming and the other was because the migration from print to digital was getting faster. What is very important from an industry point of view is that, six months earlier, Daily Mail Group and Trust paid £48 million for primelocation.co.uk, the agents' website in the UK.
Kieran O'Donnell (Limerick City, Fine Gael)
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That is a totally different market. In the limited time that I have, I want to clarify a number of points. The myhome.iewebsite was and is a property website. It was linked into property. Why did The Irish Timesinvest in a website at the peak of the market when, if it was going as well as it was going, it was being sold by three of the prime residential estate agents and one of the prime banks, which was subsequently bailed out by the taxpayer?
Ciarán Lynch (Cork South Central, Labour)
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There is a degree of repetition here.
Kieran O'Donnell (Limerick City, Fine Gael)
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Ms Donovan is not answering the question.
Kieran O'Donnell (Limerick City, Fine Gael)
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Into a market that was clearly collapsing.
Kieran O'Donnell (Limerick City, Fine Gael)
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What were Ms Kennedy's reservations? It looks like D'Olier Street was sold in 2006 for €29 million and another €10 million was borrowed and that was used to buy myhome.ie.
Kieran O'Donnell (Limerick City, Fine Gael)
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Did The Irish Timesborrow that €10 million? There were borrowings of €10 million in that particular year in the accounts.
Kieran O'Donnell (Limerick City, Fine Gael)
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What were Ms Kennedy's reservations at the time as a member of the board?
Ciarán Lynch (Cork South Central, Labour)
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The Deputy will run out of time soon.
Kieran O'Donnell (Limerick City, Fine Gael)
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What were Ms Kennedy's reservations?
Kieran O'Donnell (Limerick City, Fine Gael)
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Was there a specific editor of the property supplement?
Kieran O'Donnell (Limerick City, Fine Gael)
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Did they report to Ms. Kennedy?
Kieran O'Donnell (Limerick City, Fine Gael)
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As the editor, did Ms Kennedy feel that she had any responsibility in terms of checking the veracity of the advertisements that were put in by various developers and estate agents?
Kieran O'Donnell (Limerick City, Fine Gael)
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Property ads?
Kieran O'Donnell (Limerick City, Fine Gael)
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Were there any procedures to check that what was in a property ad was accurate?
Kieran O'Donnell (Limerick City, Fine Gael)
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Yes, I do.
Ms Geraldine Kennedy:
I have said to the Deputy that at the time there were some complaints from readers that prices we were listing in the paper were not in accordance with what had happened. If we were so sold into property, does the Deputy really think we would have made formal complaints to the estate agents and valuers which eventually led to the property register being introduced? Does the Deputy understand?
Kieran O'Donnell (Limerick City, Fine Gael)
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I understand.
Ciarán Lynch (Cork South Central, Labour)
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This is the Deputy's last question.
Kieran O'Donnell (Limerick City, Fine Gael)
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How much has been written off myhome.iein the balance sheet of The Irish Times?
Kieran O'Donnell (Limerick City, Fine Gael)
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In hindsight, was it a wise investment?
Kieran O'Donnell (Limerick City, Fine Gael)
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Even though nearly the full €40 million has been written off?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I thank the Chair and welcome the witnesses. I have a short initial question for Ms Donovan. I think it was in answer to Deputy Higgins's question that she spoke about 17% of revenue from advertising relating to property. Was that 17% of advertising revenue or of total revenue?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Did Ms Donovan meet, formally or informally, with representatives of leading developers or leading members of the banking fraternity at which discussions took place on editorial matters?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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In nine years as editor, did Ms Kennedy formally meet with leading property developers or bankers?
Ms Geraldine Kennedy:
No, but I could have met them by accident. I would definitely have run into Mark Fitzgerald because Garret Fitzgerald was writing for the paper and I would have known him. We were not, however, talking about property advertising. I may have run into others as well, but there was never, ever a meeting about property advertising with me.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Is the same true as regards financial institutions?
Ciarán Lynch (Cork South Central, Labour)
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That has already been stated in today's testimony, so I do not want repetition.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I do not think financial institutions were discussed.
I wish to put a couple of questions to Ms Kennedy relating to the testimony of yesterday's witnesses. Mr. Browne said that the political and economic elites set the agenda in Irish media circles. In the broader context of the Irish media, what is her view on that statement?
Ms Geraldine Kennedy:
I think it was Dr. Mercille who said that. I will speak for The Irish Timesand not for the broader media because I do not know the details of how other media are run. One could not be a quality, independent newspaper like The Irish Times, with a reputation around the world, without covering the Parliament - and we are the only paper in Ireland which still devotes a page to the Dáil - and without covering the Government, the trade unions and what Dr. Mercille would regard as the elites. That is what a national newspaper does. The important thing is that we also cover suicide, social exclusion, poverty and other issues as well as representing minority interests, as we are mandated to do. I do not know how one could be The Irish Timesand not cover what Dr. Mercille would call the elites, which would include places such as his own university, UCD.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Dr. Mercille went on to identify the three main factors that account for what he described as biased coverage of the economic crisis. They were the media's links with corporate and governmental sectors, advertising pressures and sourcing issues. What is Ms Kennedy's view on that?
Ms Geraldine Kennedy:
They would be areas of concern if one had to have areas of concern. I never came under pressure because of advertising to take any line on anything. I am an authority on the question of sources. The Irish Timeswent to the High Court, the Supreme Court and the European Court of Human Rights at the cost of €1 million to protect its sources. What was the first factor?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Links with the governmental and corporate sector.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Mr. Browne also said that journalists were leaned on by their organisations not to talk down the banks. Is Ms Kennedy aware of that having occurred?
Susan O'Keeffe (Labour)
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Ms Kennedy said that David Went asked whether she might write a piece about the banks. He was a banker as well as chair of The Irish Times. I take it that Ms Kennedy said "No" to that request.
Susan O'Keeffe (Labour)
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Ms Kennedy spoke about getting telephone calls, complaints, and requests for clarifications. Did anybody else on the board of The Irish Timesask a similar question during her tenure?
Susan O'Keeffe (Labour)
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Ms Kennedy said she had lots of conversations and got lots of complaints from politicians and that she would sometimes meet them at their request. Did she have any formal meeting with the Taoiseach, the Tánaiste or Government Ministers that were formally arranged on foot of a call from them to say they needed to talk about something?
Ms Geraldine Kennedy:
Not in the form of a complaint. It would be very unusual to be the editor of The Irish Timesand not have the odd meeting with the Taoiseach of the day to be briefed on policy. I remember Brian Cowen doing so and I would have had meetings with Bertie Ahern and Brian Lenihan. They never involved pressure relating to the property sector or financial interests. One likes to be informed. An editor has to write editorials and reach out to readers, so he or she must be informed. I would, on occasion, have telephoned someone for a briefing on something I did not know enough about. I regard that, though, as a normal exchange of views.
Susan O'Keeffe (Labour)
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So sometimes Ms Kennedy would ask the politicians and sometimes the politicians would ask her. It was a two-way street of exchange.
Susan O'Keeffe (Labour)
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I know Ms Kennedy said she had a record of standing up for herself against politicians, but in any of those conversations, did anyone ever suggest doing something or put any pressure on to change tack?
Ms Geraldine Kennedy:
Frequently, but it would be wrong to suggest that it was only politicians. The Irish Timesis a very important organ of opinion in Ireland which aspires to set the agenda and conducts a national debate. Vested interests would be very annoyed if we wrote things they did not like, but that is normal. Some very strange things did, however, take place at The Irish Timeswhich surprised even me. For example, ambassadors accredited to Ireland get their seal of office from the President of the day and they expect and demand a meeting with the editor of The Irish Timeswithin a week. It is as though they have not really arrived until that happens. On one occasion a judge made contact indirectly to say a photograph was being sent. He complained that his photograph had not been put in the paper. Having received his seal of office three days earlier, he felt no one would know he had been made a judge until The Irish Timessaid so. It is a strange place.
Susan O'Keeffe (Labour)
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Ms Kennedy may recall the remark made by the Taoiseach to the effect that people should take their lives if they disagreed with the status quo. Did that type of conversation ever arise between Ms Kennedy and the Taoiseach or a senior Minister?
Susan O'Keeffe (Labour)
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There was never a conversation about The Irish Timeschanging its tone to keep in line with the status quo.
Ms Geraldine Kennedy:
None that comes to mind. There must have been conversations in which they said the HSE was working well or something like that. One would listen but would then go off and do what one wanted. It would be very rude not to interact with the Government or politicians of the day.
Susan O'Keeffe (Labour)
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We have talked much about the amount of money paid formyhome.ie. Obviously, Ms Donovan wanted it to succeed. As she said, the newspaper had to own it and it still needs it. There was an imperative to make it succeed and ensure the property market was buoyant. With that, the newspaper was simultaneously providing a €100 million platform for advertisers in the six years in question. It could be argued that this showed an imperative on the part of The Irish Timesto really want the property market to go on succeeding because it had its own skin in the game.
Susan O'Keeffe (Labour)
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The newspaper already paid well over the odds for the website.
Ciarán Lynch (Cork South Central, Labour)
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The Senator is over time. Will she please conclude her questions?
Susan O'Keeffe (Labour)
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Surely the newspaper did not want it to fail.
Ciarán Lynch (Cork South Central, Labour)
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I want to clarify this. Does Ms Donovan believe the purchase of myhome.iewas a strategic and proper decision for The Irish Times?
Ciarán Lynch (Cork South Central, Labour)
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However, does she have a reviewed position on the price paid for it?
Michael McGrath (Cork South Central, Fianna Fail)
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I welcome Ms Donovan and Ms Kennedy.
Both dealt with the separation of editorial policy from commercial considerations in their opening statements. Ms Donovan stated "Editorial policy at The Irish Timesis the responsibility of the board of The Irish Times Limited" while the day-to-day policy is a matter for the editor. Did the board also deal with the commercial performance of the company?
Michael McGrath (Cork South Central, Fianna Fail)
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Is there not a direct overlap between the editorial side and the commercial side?
Michael McGrath (Cork South Central, Fianna Fail)
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Is there not a contradiction?
Michael McGrath (Cork South Central, Fianna Fail)
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The ultimate governance of editorial policy was also responsible for the commercial performance of the company.
Ms Maeve Donovan:
I think that is probably the case for many publishers. The Guardianwould be a comparable publisher in that regard. I know from some of the commentary the committee has had over the last while that The Guardianis regarded as whiter than white in its behaviour. With regard to digital acquisitions, The Guardianwas first out of the traps and paid an extraordinary amount of money in the 1990s for AutoTrader, a car website. AutoTradersubsequently bought carzone.ieand has had a strong presence on this island as a result. I have never heard anyone suggest The Guardianwent easy on the automotive industries because of that. I am sorry as that is a digression.
Michael McGrath (Cork South Central, Fianna Fail)
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That is fine.
The Irish Timesduring the period in question seems to have had a greater dependence than other newspapers on revenues from property-related advertisements. At the peak, 17% of total revenue for the business was accounted for by property-related advertising. We have had evidence already from the Irish Independentand Sunday Independentthat, on average, property-related advertising revenue accounted for 9% of total revenue and perhaps up to 11% at the peak. The Irish Examinerindicated yesterday 11% to 12% of advertising revenue was accounted for by property-related advertising revenue and it came to 7% of total revenue.
Ms Maeve Donovan:
This was for very good reasons. A significant proportion of those who read The Irish Timesare businesspeople and property investors. Advertising chases its most relevant audience. That is why we have such a strong showing for property. One of the factors with regard to the low percentage that some of the other titles have given the committee is down to the mix of revenue they carry. In the case of the Irish Independentand the Sunday Independent, one will see page after page of advertising for supermarkets. One will not see that in The Irish Times. Proportionality, the mix is different. Recruitment would also be important to The Irish Times.
Michael McGrath (Cork South Central, Fianna Fail)
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The acquisition of myhome.iehas been well covered. However, Ms Donovan stated in her opening statement, "During the reference period the company sought to balance increasing exposure to the property sector through a range of diverse activities." However, the largest investment the company made in its history was directly linked to the health of the property sector. How does Ms Donovan reconcile that?
Michael McGrath (Cork South Central, Fianna Fail)
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During the period in question, did The Irish Timeshave a specific policy governing the acceptance of gifts or corporate hospitality by journalists from banks, auctioneers and property developers? Did it instead rely on the National Union of Journalists, NUJ, and Press Council codes like the other newspaper titles?
Ms Geraldine Kennedy:
We were stronger than the NUJ. Journalists were not to take them. One would not accept trips from people. The Israeli Government on several occasions would have invited journalists from Europe to go on a street trip to Israel. When The Irish Timeswas involved, it would have expected to be able to set the agenda on where it could go and what it wanted to see. It would be stated at the end of any such articles as to who had paid for them.
Michael McGrath (Cork South Central, Fianna Fail)
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Ms Kennedy has gone to great lengths going through all the editorials during the time in question. On reflection, even taking account of the editorial space given to minority and divergent views, could more have been done to challenge the broad mainstream consensus on the economy and property sector?
Ms Geraldine Kennedy:
I am not sure where I would start doing it. I do not know what I could do that we did not do. We reported all news reports fairly and gave their views, some of vested interests, some of banks. We particularly pursued academic economists. We had as diverse a range of views as we possibly could in the opinion pages on the state of the economy. We employed an economics editor all the time which other newspapers often did not do. We were very cautious and raising concerns in leading articles for a long time up to the bust. I do not know what we could have done. I would love to be able to say if I pressed that button and did that, then would I have been Morgan Kelly but I would not.
Marc MacSharry (Fianna Fail)
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I welcome Ms Donovan and Ms Kennedy.
In yesterday’s testimonies, there was an issue of a journalist who had been disciplined by way of losing his job because an advertiser had complained. It was stated this was close to the late height of the boom. Then the other issue was for the earlier part of his career when he spoke about the bricks and mortar issue.
Ms Kennedy’s counterpart at the time in the Irish Independentstated, "My primary fixation was optimising the sales of the newspaper." What was Ms Kennedy's primary fixation?
Ms Geraldine Kennedy:
My primary consideration was to inform my readers about what was going on. In so doing, one would like to maintain and increase circulation. We did that for a long time up to about 2006 and it then started falling as people moved more and more towards digital. My primary fixation would be to have quality and well researched content to inform our readers.
Marc MacSharry (Fianna Fail)
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Did Ms Kennedy, given the set-up of the trust or whatever, in her editorial capacity feel that the commercial direction betrayed her ideal of trying to inform the readers?
Ciarán Lynch (Cork South Central, Labour)
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Did Ms Kennedy say "featuring" or "portraying"?
Marc MacSharry (Fianna Fail)
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I said betrayed.
Marc MacSharry (Fianna Fail)
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The Chairman should stay out of it. We know what we are talking about over here.
Ciarán Lynch (Cork South Central, Labour)
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I am not trying to orchestrate the Senator's line of inquiry.
Marc MacSharry (Fianna Fail)
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The Chairman is imperfect.
Ms Geraldine Kennedy:
I never thought that the commercial policy being pursued by the newspaper was threatening the ideals of the trust. Certainly, the commercial policy of the newspaper never affected coverage in The Irish Times.I never kept anything out. I never stopped investigating anything that would hurt somebody on the board, on the trust or anything like that.
Marc MacSharry (Fianna Fail)
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On a day when Ms Kennedy had put the paper to bed and she decides to look at it on her way home or the next morning to see who wrote what about X, out falls the 40 pages of a property supplement. Does Ms Kennedy have any thoughts about that?
Ms Geraldine Kennedy:
I would say thank God but not because it is the property supplement. I never looked at an advertisement in a newspaper until I became editor. I can tell the Senator that is a fact. Being on the board and everything like that, one became more conscious that a lot of money is needed to run this newspaper and to maintain a standard in quality when other newspapers did not. For example, The Washington Postand all American newspapers now have no correspondence and in Europe they have cut all that down. There is a real retrenchment in newspapers. If I looked at a big property supplement, a big job supplement or any other sort of a supplement I would say, "Great, we are making money".
Marc MacSharry (Fianna Fail)
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Ms Kennedy mentioned that Mr. McWilliams predicted the crash-----
Marc MacSharry (Fianna Fail)
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-----in 1999.
Marc MacSharry (Fianna Fail)
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Ms Kennedy said that if one keeps saying something it will come true. Was Ms Kennedy trying to say that a stopped clock is right twice a day?
Marc MacSharry (Fianna Fail)
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Does Ms Kennedy feel that his analysis was that shallow?
Ciarán Lynch (Cork South Central, Labour)
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That was a leading question.
Ciarán Lynch (Cork South Central, Labour)
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Yes.
Ciarán Lynch (Cork South Central, Labour)
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I thank the Senator.
Marc MacSharry (Fianna Fail)
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I thank Ms Kennedy. I have a question on the commercial side of the business. I wish to refer to the bonus structure for property sales executives. Is a property sales executive expected to sell across the board? Is person "A" assigned to property and person "B" assigned to recruitment?
Marc MacSharry (Fianna Fail)
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Does the same bonus structure exist?
Marc MacSharry (Fianna Fail)
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What are targets based on?
Marc MacSharry (Fianna Fail)
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What would one base the projections on?
Marc MacSharry (Fianna Fail)
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I pursued this line of questioning earlier. What is the salary range of the sales executives? In the relevant period, what kind of bonuses existed? What was the bonus structure? What was the percentage? What way was it structured?
Marc MacSharry (Fianna Fail)
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I am inquiring about when Ms Donovan worked there.
Marc MacSharry (Fianna Fail)
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I thank the delegation.
Ciarán Lynch (Cork South Central, Labour)
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I thank the Senator and call Senator Michael D'Arcy.
Michael D'Arcy (Fine Gael)
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The ladies are very welcome. Does Ms Kennedy believe The Irish Times contributed to the property boom?
Ms Geraldine Kennedy:
I do not know. Was it the Taoiseach, Deputy Enda Kenny, who said that people went mad? I suppose there is the fact that people were looking at houses and here one had a supplement where one could look at beautiful houses. Did that encourage people to go out and buy them? I do not know. If they were to go out and buy them they have to get mortgages and everything like that. We were not telling them to go out and buy them or get mortgages. I would be reluctant to say "Yes" to the Senator's question.
Michael D'Arcy (Fine Gael)
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Is Ms Kennedy saying "No"?
Michael D'Arcy (Fine Gael)
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I ask Ms Donovan the same question.
Ms Maeve Donovan:
My take on it would be that in so far as we are contributors to a dialogue, within society as a whole, I presume we have a role to some extent.
I would say to the Senator that the audience for The Irish Timesare very educated and are very well informed. I do not think that because we ran property advertisements in The Irish Timesthat the average reader, of The Irish Times, was running into the street, waving their chequebook and saying, "I'm going to pay an inflated price for whatever".
Michael D'Arcy (Fine Gael)
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I did not ask that question.
Michael D'Arcy (Fine Gael)
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I asked did The Irish Timescontribute to the boom and I am not saying how much or little.
Ms Maeve Donovan:
I would tend to agree with one of the committee's earlier presenters. Dr. Nyberg, I think, said to the committee that when he ranked the factors that contributed from Nos. 1 to 7, he put the media at No. 7. Did we have some role? Of course we had some role. I do not think we were a major cause of the property boom, no.
Michael D'Arcy (Fine Gael)
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Ms Donovan has said the media had a role and did contribute.
Michael D'Arcy (Fine Gael)
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My next questions are for Ms Kennedy who is a long-standing journalist and then editor. The Irish Timesgroup is the third group of media outlets who have attended here. They have all said much the same thing, that there is zero cross-over between the commercial and editorial sides. In fact, none at all. Is that a bit pure? Is there some cross-over?
Ms Geraldine Kennedy:
Certainly, The Irish Timesis in a very strong and special position because it is done by trust and that is valued by all journalists who work for it. That is the greatest thing that The Irish Timeshas going for it, if one is a journalist for the newspaper.
There is, of course, interaction. We have not said this but I suppose it is worth saying. There is a weekly management meeting which would be made up of some editors, departmental heads, marketing, advertising, promotion, managing director and editor where one talks about plans for the week ahead. It is where we would say, "We are doing a series on suicide and we think you should promote it". There would be that sort of interaction or one could not survive. One is selling two things in a newspaper - sales and news. One has to have interaction because one is moving at such a pace. One has a deadline driven environment every day so of course there is interaction. It is a bit pure to say there is no interaction because there simply has to be. One must get on to the printing plant in Citywest and say the paper is going to be such a size on such a night. The two sides of the house have to work together on it.
I would doubt myself that if we are not white as snow the Irish Independentis that pure. I know that Denis O'Brien, for example, was on to me about an advertisement, to get me to insert it, about the Mahon tribunal. I know that Sam Smith, and the committee probably know it themselves as he would tell them, went off down to cover the Mahon tribunal when Mr. O'Brien was before it yet not a word appeared in the newspaper. That sort of thing would not happen in The Irish Times.
Michael D'Arcy (Fine Gael)
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Can I further probe that line of questioning, Chairman?
Ciarán Lynch (Cork South Central, Labour)
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If one has to, Senator.
Michael D'Arcy (Fine Gael)
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Something may not be said but there may be an understanding. Can what Ms Kennedy has just said be said about other and all media outlets? My question is for Ms Donovan.
Michael D'Arcy (Fine Gael)
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While something may not be said, there may be an understanding or there is a possibility that there is an understanding that there are some areas where one does not go.
Michael D'Arcy (Fine Gael)
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Can I advance my query a little bit beyond property, Chairman?
Ciarán Lynch (Cork South Central, Labour)
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It seems quite advanced already.
Michael D'Arcy (Fine Gael)
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I wish to follow a line of questioning. I ask the Chairman to allow me to do so because if it happens in another sector it also happens in property.
Ms Maeve Donovan:
There is obviously a lot of interaction between the commercial and editorial sides, as Ms Kennedy has told the committee. We are involved in a fairly complex endeavour that requires our co-operation. With regard to any advertising appearing in the newspaper, what it is chasing is the audience.
Michael D'Arcy (Fine Gael)
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I am not sure that Ms Donovan is getting what I am saying.
Michael D'Arcy (Fine Gael)
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What I am saying-----
Ciarán Lynch (Cork South Central, Labour)
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Please ask the question again, Senator D'Arcy, and then wrap up.
Michael D'Arcy (Fine Gael)
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While there are areas that should not be reported or that should be reported, there can be an understanding, or, as Ms Donovan said, an implied understanding, that those involved simply do not go there. Is that the case?
Ciarán Lynch (Cork South Central, Labour)
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We are now going to move towards a wrap-up. I will take in the two leads and then I will deal with some supplementary questions towards the end. Senator Barrett, a question with a supplementary, please.
Sean Barrett (Independent)
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Thank you, Chairman. I welcome our visitors. There are some matters arising. I did not interpret Mr. Browne's evidence as hostile in any way. The matter of how I interpreted what he was saying yesterday only arose today.
I will move on to other matters. Does the training of journalists equip them to deal with the kind of crisis that this inquiry is investigating?
Reference was made to pressures that people exercise on editors. I think this will surprise the people watching at home. They do not ring up a judge before a case. They do not even ring up a referee before an important match. Therefore, the idea that so much of this influence is being sought to be exercised is quite a serious new finding for those of us outside journalism. I suppose it depends on what the bar of public opinion will decide about that.
Did the discussions with the former Minister, Brian Lenihan, include how important it was, in his view, that the banks should be bailed out?
Ms Geraldine Kennedy:
No. I will address the question about the training of journalists first. Some contributor to the committee made the point that they should all be trained in financial journalism. Financial journalism is only one aspect of a newspaper. Therefore, we do not want them all trained in financial journalism. We had economics writers. We had Simon Carswell, who specialised in the banks to such an extent that the committee invited him to appear. I thank the committee for that. We had Frank McDonald, who specialised in planning. Therefore, different journalists at different times specialise, often learning it on the hoof out in the field. I do not think there is anything wrong necessarily with the training of journalists, because if the whole economics profession, with the exception of your David McWilliams and my Morgan Kelly, did not see any sort of crash, then how could I have trained a journalist to see it?
Sean Barrett (Independent)
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The influence-----
Sean Barrett (Independent)
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He just wanted his photograph in the newspaper. Was that it? I was saying that people watching here do not attempt to influence decision-makers in the sense that they would not contact a judge or a referee. However, Ms Kennedy gets contacts on a regular basis from Ministers or people in business attempting to influence the content of The Irish Times.
Sean Barrett (Independent)
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I think many people outside do not behave like that. They do not attempt to influence law cases. They do not even attempt to influence refereeing decisions. They will be surprised by what Ms Kennedy has told the committee.
Sean Barrett (Independent)
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The evidence-----
Ciarán Lynch (Cork South Central, Labour)
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Briefly, Senator. I need to push you. It was a matter of a question and a supplementary, not a whole new line of questioning.
Sean Barrett (Independent)
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Is there evidence on the Sam Smith case? Ms Kennedy raised concerns about the Mahon report.
Eoghan Murphy (Dublin South East, Fine Gael)
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One thing I should have put on the record, but completely forgot to, is that my brother sold advertising for The Irish Timesfrom the London office.
Eoghan Murphy (Dublin South East, Fine Gael)
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I am not going to comment on that, but I think perhaps it was around 2002 or 2003. I had completely forgotten about it.
Eoghan Murphy (Dublin South East, Fine Gael)
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My question relates to Ms Kennedy's response to Senator D'Arcy when he was asking questions about contacts Ms Kennedy had received. Ms Kennedy talked about someone contacting her about an advertisement. It related to the movement or placement of an ad. I was a little unsure.
Ms Geraldine Kennedy:
It would be very unusual for me to be contacted about an ad. However, within The Irish Times, if what might be deemed a distasteful or garish ad or something like that came up, the advertising manager or his deputy would come to me and point out that it was going in tomorrow and might ask whether that was okay. On some occasions I would say "No". The other thing they would be looking for is to shape ads. They might want the ad to be a given way so that the ad was the feature on the page and the editorial was simply dressing, whereas I would always insist that it should be the other way around, because it is a newspaper and the ads should go around the stories.
Anyway, I was contacted by Denis O'Brien because he had put in an ad which was pulled by me from the newspaper. He must have been told that the editor had pulled it. Then, the next time he wanted to put in an ad he wrote directly to me and put it to me that I would be making the decision anyway. That was the reason for that particular contact.
Eoghan Murphy (Dublin South East, Fine Gael)
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Why did Ms Kennedy pull the ad in the first instance?
Ms Geraldine Kennedy:
I pulled the ad because it was that chocolate box ad or chocolates ad about the Mahon tribunal. I pulled it only-----
Ciarán Lynch (Cork South Central, Labour)
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I am sorry, Ms Kennedy. Has the ad anything to do with the topic of this inquiry, the banking crisis or property?
Eoghan Murphy (Dublin South East, Fine Gael)
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The witness mentioned it. I was interested because it was about the placement of advertising.
Ciarán Lynch (Cork South Central, Labour)
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I wanted to establish the point, because there seems to be a discussion going on here.
Eoghan Murphy (Dublin South East, Fine Gael)
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I gather Ms Kennedy also said in her earlier remarks that The Irish Timesdoes not do advertorials.
Eoghan Murphy (Dublin South East, Fine Gael)
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Why not?
Eoghan Murphy (Dublin South East, Fine Gael)
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Let us consider the property supplement of a newspaper. Another newspaper was before the committee. The representatives said that their property supplement was a commercial vehicle by which to sell advertising, which made up 65% of the supplement. Can the same be said for The Irish Timesproperty supplement? Is it a commercial vehicle to sell advertising?
Eoghan Murphy (Dublin South East, Fine Gael)
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Does Ms Donovan believe a person reading the property supplement can make the distinction between editorial and advertorial when there is a paid-for ad on the back page for a property that is for sale and a front-page glowing description of that same property, its unique features and why it is worth the value that it is worth?
Ms Maeve Donovan:
Generally, if it is on the front page it is because the property is exceptional in some way or of particular interest in some way. I would hope that they can make the distinction, yes. I sincerely hope that they would also make the distinction between the quality of content in that area in The Irish Timesand elsewhere, because I think there is a considerable difference.
Eoghan Murphy (Dublin South East, Fine Gael)
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Is Ms Donovan referring to the quality of content versus content elsewhere?
Eoghan Murphy (Dublin South East, Fine Gael)
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Does Ms Donovan believe similar content in other publications verges towards advertorial?
Eoghan Murphy (Dublin South East, Fine Gael)
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The placement of a particular property-----
Ciarán Lynch (Cork South Central, Labour)
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Please move on. This is your very last question, Deputy.
Eoghan Murphy (Dublin South East, Fine Gael)
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What is on the front page bears no relationship to the fact that advertisements have been bought in the same supplement. Is that the case?
Eoghan Murphy (Dublin South East, Fine Gael)
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Perhaps, but is it news?
Eoghan Murphy (Dublin South East, Fine Gael)
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That is different, because of the political connotations of that particular property.
Eoghan Murphy (Dublin South East, Fine Gael)
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It is not news that a particular property might have a lovely view of Dalkey bay. That is not news.
Ciarán Lynch (Cork South Central, Labour)
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That is the second time we have had U2 this week.
Is what we are really looking for here-----
Eoghan Murphy (Dublin South East, Fine Gael)
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Forgive me, but not every house being sold is being sold by a celebrity.
Ciarán Lynch (Cork South Central, Labour)
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This line of questioning is coming to an end. I will wrap things up but before I do, I wish to return to a couple of matters. In her opening statement, Ms Kennedy states on page 4 that she thinks "... it is fair to say that the policy of The Irish Timeswas critical of both the establishment and operation of the Financial Regulator and IFSRA, believing that they were not independent of the Central Bank". Will she elaborate on this statement?
Ms Geraldine Kennedy:
There were editorials, which I have provided to the committee, and a number of commentators, including the business editor, wrote columns taking the point of view that the regulator, not the person but the regulator, was not sufficiently independent of the Central Bank at the time. I think that is now practically an established fact.
Ciarán Lynch (Cork South Central, Labour)
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Some of the testimony from Peter Nyberg and others that came before the committee - I think Professor Honohan - was that there is a counter argument that separating the two of them created disjointedness as well. It was the operational side of the offices of the Central Bank. Is Ms Kennedy's view still the same or has it been reshaped?
Ciarán Lynch (Cork South Central, Labour)
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That they should be separate?
Ciarán Lynch (Cork South Central, Labour)
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The nature of advertising and how it can be explosive in a growing economy and shrink very quickly when there is a downturn is something which came up with the Irish Independent this morning. Will Ms Donovan tell us if The Irish Times has done any modelling or examination with regard to that cycle and phenomenon?
Ms Maeve Donovan:
Not specifically. Obviously, on an ongoing basis every year, we try to take a view as to which way the market is going to go. It would probably be an interesting area of study to look back at. However, whether or not with the pace of change it would be any way indicative for the future, I could not tell the committee.
Ciarán Lynch (Cork South Central, Labour)
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I thank Ms Kennedy and Ms Donovan for coming before us this morning. The purpose of this inquiry is severalfold. It is not just to look at the past and put pieces of a jigsaw together but also to take those lessons from the past and give them a context, into the future, so the crisis and the hardship which was visited upon the Irish public and the Irish nation is not revisited upon their shoulders again. Are there any lessons which the witnesses can draw from that crisis period and provide to this inquiry this afternoon in terms of either the media or, generally, going into the future, what we need to be doing as a country?
Ms Geraldine Kennedy:
One of the big lessons to be learned by politicians is the importance of a free and independent media and the ownership models of media. This is an issue that is somewhere or other on the Government's agenda. It brings home once again how important that is to a free and democratic society.
Ciarán Lynch (Cork South Central, Labour)
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This question was posed this morning with one of the other news agents - does Ms Kennedy believe that this inquiry is hindering or helping that independence of media?
Ciarán Lynch (Cork South Central, Labour)
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Does Ms Donovan wish to add anything?
Ms Maeve Donovan:
I would absolutely agree with Ms Kennedy. For us, on the business side, it has been a very good experience to go back and review in a more forensic way our planning and so on. I could not point to anything of any significance which has changed for us in terms of how we go about our business. It reassured us with regard to the fact that we have a very robust model. Given our structure, what we do is earn as much as we can to invest in good journalism, to put people out where the current editor wants them to go and to finance the type of appeal with regard to sources that Ms Kennedy spoke about earlier. We were able to spend over €1 million on appealing to the European Court of Human Rights on the protection of sources because we carry a lot of property, recruitment and motor ads. This is the way in which we operate. We have a very circular process. Everything goes back into the product and into ensuring its longevity.
Ciarán Lynch (Cork South Central, Labour)
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I bring this session to conclusion. We will commence on session 3 later on this afternoon. I thank Ms Geraldine Kennedy and Ms Maeve Donovan for coming before the inquiry today and for their assistance, participation and engagement in helping us form our views. I thank them for their valuable contributions. I excuse the witnesses and propose that we suspend until 3 p.m.
Ciarán Lynch (Cork South Central, Labour)
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We will commence session No. 3 of today's hearings with Mr. Ed Mulhall, former head of news and current affairs, and Mr. Paul Mulligan, head of commercial operations at RTE. We are focusing on the role of the media during the property boom in the lead-in to the banking crisis in the period 2002 to 2007. Our next session will look at any changes in approach after the crisis. I welcome Mr. Ed Mulhall and Mr. Paul Mulligan, who are specifically invited to discuss RTE's editorial policy on the economy and the property boom, and separately RTE's business model and sources of revenue, including that from the real estate sector, from 2002 to 2007.
Mr. Ed Mulhall is a Trinity College Dublin politics and economics graduate. He joined RTE as a radio producer in features and current affairs in 1979. He was appointed assistant head of features and current affairs in 1985. He became a television producer in 1998 before moving to RTE News as a programme editor for the launch of "Six One News". He became managing editor of television news in 1994, director of news in 1997 and managing director of news and current affairs in 2002. Mr. Mulhall had a lead role in all the general election coverage since 1981 and was a producer and executive producer on a number of documentaries. He retired from RTE in March 2012.
Mr. Paul Mulligan has been head of operations of RTE television since 2009. From 2005 to 2009 he was head of operations, sales and marketing of RTE television and radio. He is chair of the Joint National Listenership Research, JNLR, data implementation group and director of the Advertising Standards Authority. Mr. Mulligan holds an MA in economics from Dalhousie University, Halifax, Canada.
Before I begin I wish to advise the witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the Chairman to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and, as they have been informed previously, the committee is asking witnesses to refrain from discussing named individuals in this phase of the inquiry.
Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. Mr. Mulhall and Mr. Mulligan are both very welcome before the inquiry. In their own choice of sequence, they should commence with their opening statements.
Mr. Ed Mulhall:
Thank you, Chairman. The starting premise for a discussion of RTE's editorial policy on any area of public interest is that there is no single expression of it. RTE's output is based on a set of principles which are derived from its statutory obligations. These principles form the framework for editorial decision-making, and there is an editorial structure in place to monitor, discuss and challenge the editorial selections being made to ensure these principles are adhered to. In RTE News this translates into a very simple premise: inform the audience in the public interest.
The political scientist, Jean Blondel, in an essay written in honour of the late RTE broadcaster, Brian Farrell, calls the role to inform "the noblest of tasks" because it is the most difficult. It requires the reporting of facts, sometimes the establishment of facts, their selection according to their importance and the presentation of them with related material to allow their meaning or significance to be understood. Referring to a concept of a national consensus, Brian Farrell himself described it as a living, flexible and loose set of shared ways of looking and ordering experience, constantly adjusting to and affected by the changes that these experiences represent. He agreed that the whole concept of a free press in a free society supposes that any established or emergent ideology should be constantly open to challenge and criticism.
This is the basis for judging how RTE and other media performed their functions in the period under scrutiny. Did it live up to this responsibility to inform? Did it strive to establish the important facts in the rapidly changing environment? Did it provide vigilance and challenge to assist understanding? It is my personal view that RTE performed its public service role well in the period under discussion. Could we have done better? Of course we could.
An expression of RTE’s view of its obligations is found in its vision mission values statement: to inform and to connect with the lives of all the people and deliver the most trusted, independent Irish news service, accurate and impartial, for the connected age. The Broadcasting Acts are explicit in their requirement of news to be “reported and presented in an objective and impartial manner and without any expression of the broadcaster’s own views". RTE's public service statement specifically requires it to remain independent of any vested interest. RTE prepares an annual series of commitments based on these principles and strategic objectives. It reports on these in its annual report. This forms part of the Broadcasting Authority of Ireland's review of RTE activities.
To ensure the delivery of these basic principles RTE has developed a series of journalism guidelines. In my written statement I have gone into detail on the structures which deliver and monitor content. There is no single editorial vision when it comes to RTE content. For news, story selection has a variety of editorial inputs throughout the day, particularly from the specialist correspondents. For programmes, each unit makes its own independent selection of what to feature, often in competition with other RTE output. This process is overseen by an editorial conference structure that in my experience allows, and often encourages, editorial debate and challenge. It is a structure which operates in a legal and compliance framework, requiring it to be vigilant of its responsibilities and to respond to complaints, representations and legal challenge promptly. It is a structure with clear lines of editorial responsibility. I can only speak subjectively about how RTE performed during the period.
There has been little or no authoritative objective media analysis that I have seen that assists any other approach.
It is worth remembering that there is a vast amount of material in the regular news bulletins and other current affairs programmes. The two main correspondents in news have nearly 2,000 reports logged to them in television alone for this period and "Prime Time" did 120 programmes from 2000 to 2008 on the subject matter of this inquiry, with a third of those on property. I am also conscious of something highlighted by Peter Lunn in an interesting paper on decision making biases in the banking crisis. It is called "hindsight bias" and is defined as a "tendency to perceive an event as more predictable than it actually was, and to overestimate the degree to which we actually did predict it".
Most of the key moments or statements we remember from the crisis period were probably seen or heard on RTE programming, from Charlie McCreevy's budget in 2002 with its supports for the property market to Brian Lenihan announcing the guarantee or Patrick Honohan confirming the bailout on "Morning Ireland". Throughout this period, in RTE news we were just reporting what was happening. That was our job. We followed events as they happened and tried to ask the right questions about them. We were also open to including in our coverage, and to give prominence to, what the inquiry is calling "the contrarian view". Indeed, because of our questioning approach, mandated by the principles I outlined earlier, some of our coverage was classed as being contrarian. Certainly, our economics editor would have been put in that category during the period by other media outlets.
We gave great prominence to the European Commission warning of 2001 and the Government's rejection of it. Each of the ESRI reports outlined by Professor FitzGerald in his testimony that warned of the imbalance in the economy and the need to introduce counter-cyclical measures was covered by RTE. We covered all Central Bank reports and reports on the Irish economy by the OECD and IMF. There was extensive coverage of the continued rise in house prices, the change in lending policy, the construction boom and the relationship between bankers and developers. From 2007, there was a particular focus on Anglo Irish Bank, which extended to all of the banks following the share price drama of St. Patrick's Day in 2008. Each shift in Government economic policy received detailed scrutiny, including in the elections of 2002 and particularly 2007.
George Lee's documentary "Boom" in June 2006 was particularly significant, not just for his provocative statement on the death of the Celtic tiger but particularly for his analysis of personal indebtedness, the dependence of the economy on property-related Exchequer funding and employment, and the real possibility that there could be a property crash. The analysis done for "Boom" informed George Lee's reporting from then on, and contributed to an alertness to these issues across our output. Richard Curran's "Future Shock" programme in April 2007 was another key programme. It was followed by a debate on "Prime Time" between Morgan Kelly and Jim Power on soft and hard landings and led to a period of sustained criticism of RTE, including a number of formal complaints.
There was a journalistic awareness that Anglo Irish Bank should be watched as a story from the initial share price wobble in 2007. In January 2008, for example, there was some controversy about a story David Murphy ran about stockbrokers recommending that clients sell Anglo Irish Bank and AIB shares. The Northern Rock crisis, with queues at the Dublin offices, brought an awareness that international turbulence could have implications for institutions here.
The collapse of Lehman Brothers saw a major shift in the story. From then to the arrival of the troika, it was continuous coverage. As well as the pressure to be accurate in our reporting and analysis, there was the added dimension that what we were reporting could impact on events, as there was an international focus on what was happening here. An example of this was the concerns of the Minister for Finance about the impact of a "Liveline" programme which featured callers talking about removing their money from institutions. When contacted about this, our response in RTE news was to say it was not our role to provide assurances or to stop reporting something we knew was happening, but that if the Governor of the Central Bank or the regulator wanted to say something we would certainly get it on the "Nine O'Clock News". One of the more detailed contributions during the period shortly after the guarantee was Patrick Honohan's Michael Littleton memorial lecture on Radio 1 on 2 December. In it he stated his analysis that unlimited guarantees add to the cost of the crisis and that where illiquidity is obvious there is usually a deal of insolvency lurking in the background.
If there was a gap in coverage, it was the solvency versus liquidity issue in the main banks. Although the issue was raised, most notably by Morgan Kelly, there was little evidence from within the institutions until the information from the stress tests started to be revealed. Had we been able to discover this type of information from within the banking institutions we would have reported it. Certainly, it would not have been an easy matter given the legal environment. In the past RTE had fought cases in the Supreme Court to defend the right of the media to continue investigations into wrongdoing in the financial sector, and we would have again. When we had undisclosed information such as that revealed in David Murphy's story on Irish Life and Permanent and Anglo Irish Bank end of year arrangements we reported it. However, there were no whistleblowers. Even when "Prime Time Investigates" went back to the issue in the "Meet the Bankers" investigation only one could be found.
There are other areas which I believe could have been explored further. We, like other media, tended to struggle to report on regulatory and administrative structures. Second, there could have been a greater emphasis on the interlocking of the financial structures and the implications of this for policy responses to the crisis.
The inquiry has asked me about the relationship between the editorial and sales functions within RTE. In my experience as managing director of news and current affairs, there is none. When RTE was restructured into integrated business divisions in 2002, with devolved finance, commercial, press and human resources functions, the news and current affairs independent business division, IBD, was kept separate from any commercial activity. My only contact with the commercial division would be as a member of the executive board, and the only times we would have been consulted on a commercial issue would be on sponsorship options related to content position within news programming, such as weather and traffic. I have no recollection of any representations or even queries from the commercial side of RTE on an editorial matter and none concerning the subject matter of this inquiry.
The period under review was a time of intense interest in news and current affairs, an interest which grew as the economic crisis developed. The coverage and reporting I have been outlining were not isolated incidents in specialist publications. They were all contained on high audience, mainstream programming. We also know what the audience thought of this coverage. In 2008, 79% of a national sample of the RTE audience considered economic coverage of a high quality, with a similar figure for business coverage. The quality of the coverage is due to the expertise and diligence of the RTE staff working in this area and their commitment to public service principles.
I hope I have shown that RTE did, and does, take its responsibilities as a public broadcaster very seriously. It is essential that we do not just explore what happened but pay great attention to the why, and what is needed structurally and behaviourally to avoid the possibility of another crash.
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.
Ciarán Lynch (Cork South Central, Labour)
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I just want to deal with one item before we go to the lead questioners, and that is the issue of the "Future Shock: Property Crash" programme that was broadcast in April 2007. As the witnesses are aware, the programme had a very serious commentary with regard to where the property market was going, where values might fall to, and other pending concerns. In the immediate aftermath of that programme, can Mr. Mulhall describe to us what was the general mood in RTE at an editorial and management level? Was he approached by any sectors outside RTE regarding the concerns that were raised in that programme? Does he have any recollection of what was the general media commentary, critique or analysis of that programme?
Mr. Ed Mulhall:
In dealing with some of the questions in this inquiry, I am conscious that I am here to give evidence. I am not going to talk about things that I do not have direct experience of. I will probably use that qualification a couple of times when I am saying something.
With regard to "Future Shock: Property Crash", I did not have direct editorial responsibility for it. It was commissioned by Kevin Dawson in features, so he would have reported directly to the director of television, who was Noel Curran at the time. In terms of the fallout from that programme, television would have dealt with it directly.
Ciarán Lynch (Cork South Central, Labour)
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What fallout?
Mr. Ed Mulhall:
Any fallout. I will give examples of it. I know of some of the discussions around it because I would have been involved in discussions, so I am not totally oblivious to what happened, and also because many issues regarding the programme might have come originally to current affairs, assuming that it was a direct current affairs programme.
In the immediate aftermath of the programme, RTE was dealing with a number of official complaints. There were complaints that went to the Broadcasting Authority of Ireland about the programme. In my recollection, I think they came from representative bodies, but the Chairman can check the record of who made the complaints. I think RTE fought that complaint successfully.
There was also a deal of press coverage in the immediate aftermath of the programme. Richard Curran is on record, in the book by O'Donovan and Murphy, as talking about the reaction to him in the aftermath of that programme. Richard Curran worked as a correspondent in news before moving to the Irish Independent. I have known Richard for a long time, so I would have talked to him during that period.
Ciarán Lynch (Cork South Central, Labour)
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Is Mr. Mulhall saying that the editorial policy to broadcast "Future Shock: Property Crash" was taken at a lower tier of editorial decision-making as opposed to a higher tier in RTE?
Mr. Ed Mulhall:
No; I am saying it was taken at a different tier. The decision on commissioning the documentary and broadcasting it would be taken at the TV programmes level. It would have been done in discussions with news and current affairs at the time, because those programmes - the special Monday night documentaries, as they were - ran in parallel with "Prime Time Investigates". Therefore, there was co-ordination between the current affairs section and the television programmes section about the subject matter for those documentaries.
It is obvious in terms of the coverage as well, because "Future Shock: Property Crash" ran on a Monday night, and the following night's programme on Prime Timehad a discussion involving Morgan Kelly, as it turns out, about the content of that programme. That is one of the most highlighted examples on YouTube of the early discussions of the crash.
Ciarán Lynch (Cork South Central, Labour)
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Within RTE at the higher editorial level, were there any divergent or conflicting views on whether the programme should have been broadcast?
Mr. Ed Mulhall:
Not at all, to my knowledge, and I would have attended all the editorial conferences that reviewed the programme. Every programme that we broadcast would be reviewed on Friday after broadcast, at which time we would deal with any issues that came up in the programmes. It would have been discussed in advance of broadcast in the forward plans. If there had been a major issue it could have been brought up at an executive board, so I can say none of that came across.
The other thing that is probably worth stressing as well - I will probably come back to this later - is that it was not an isolated programme from RTE in that period. A year previously, in June, the other documentary that I mentioned in my statement, "Boom", which George Lee presented, dealt with pretty much the same issues in a wider context.
Ciarán Lynch (Cork South Central, Labour)
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That was important.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I welcome Mr. Mulhall and Mr. Mulligan. Following on from the Chairman's opening question, I was also going to ask about the "Future Shock: Property Crash" programme. Mr. Mulhall mentioned a number of formal complaints that were made. Was there informal contact either with Mr. Mulhall or with the producers of the programme, or the subsequent "Prime Time", on which there was a discussion about the programme, rather than a formal complaint to the Broadcasting Authority of Ireland?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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In Mr. Mulhall's ten years in his role as managing director of news and current affairs, were there any moments when members of the banking industry or the construction sector, or their representatives, met either formally or informally with RTE, and where discussions about news content or editorial decisions took place?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Yesterday one of our witnesses was Dr. Julien Mercille. In his presentation to the inquiry, he made the following observation, "During the boom years RTE had as chairman a director of Anglo Irish Bank, which epitomised the excesses of the Celtic tiger and property lending." To Mr. Mulhall's knowledge, at any stage did that institution or any other financial institution attempt to influence - or maybe not directly influence, but have any discussions about - editorial matters or news content matters within RTE? If they did, will Mr. Mulhall comment?
Mr. Ed Mulhall:
The answer is "No". The particular chairman of the authority is mentioned and named in Dr. Mercille's books, so it is not hard to find out who he was. He is now deceased. In my recollection of him as chairman of the authority, he was one of the best chairmen in terms of trying to get RTE - particularly the business side of RTE and the financial structures - in order. He was very significant in the licence fee campaign in 2002. Another subsequent chairperson is also mentioned in Dr. Mercille's book, and she was probably one of the strongest chairpersons in terms of standing up when complaints happened. It might be simplistic to cast people in a particular role. Certainly, with regard to the deceased former chairman I am referring to, I come from a very different perspective on a lot of things, but never in any of my dealings with him would he have tried to influence me with regard to coverage of business or banking matters or of the company he originally came from.
Mr. Paul Mulligan:
I would like to make an additional comment, please. The chairman referred to in the book was actually chairman of RTE between the years 2000 and 2005. From a commercial revenue point of view, they were not the biggest years. The year 2004 was the first year we actually started to make any money in the boom period as such. He actually was not the chairman for the boom period, but putting a name like that into it makes a point. There is another point I would make. I do not mean to be facetious, but if he was a director of Anglo Irish Bank, RTE never received any money or any advertising or content or anything from that bank. If there was cross-pollination, it certainly did not happen in relation to revenue to RTE.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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To summarise Mr. Mulhall's comments, he is saying that in his ten years there were never any formal or informal meetings between RTE management and editorial staff and financial institutions or their representatives, or representatives of construction-----
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I will refer now to the period of the bailout. It has been commented on in many places that it was mostly the international media that broke the story of assistance being sought by Ireland from the IMF and the European Commission, before the domestic media discovered it. Was there any pressure exerted on RTE at that time as to its reportage and what it should or should not cover? Not covering something could often be as significant as covering it.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Yes.
Mr. Ed Mulhall:
I do not mind answering that question if the Deputy wishes me to answer. The main difficulty that RTE journalists had at that time was getting people to answer direct questions right through that period. Everyone remembers pictures from RTE programming of Ministers shaking their heads and denying things that were happening. There were people refusing to give information to correspondents. In fact, at the same time as the BBC was breaking the story that the bailout was happening, RTE's business correspondent was on RTE programming talking about the same issue. The most significant intervention in terms of alerting the public that the denials were wrong was the phone call from Patrick Honohan to "Morning Ireland". That was a very fraught period. It is a long way from the period we are discussing, but in terms of the interaction between Departments and Government representatives and all media, it was a very fraught period. I would be denying a lot of things if I said it was not fraught, because it was a very fraught period.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Was Mr. Mulhall contacted by the Government press secretary at the time, or other press agents for Government parties?
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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The point I am trying to get to is the next question. Was it put to Mr. Mulhall or inferred in any of those contacts that coverage by RTE could at that particular juncture create, for instance, a run on the banks? Were any implications rather than direct comments made?
Mr. Ed Mulhall:
In order to be accurate in terms of the period, we need to separate out the timeframe. One of the challenges faced by the inquiry is that when looking back, everything gets pulled together into one timeframe. The gap between the guarantee and the bailout and the troika was nearly two years. It is a long period of time. I will walk back into the timeframe I was asked to deal with, because it gives an answer to the Deputy's question.
I have mentioned in my statement the reaction to the "Liveline" programme just before the first guarantee, the €100,000 guarantee on deposits, which was in September. It is on the record in Deputy Murphy's brother's play, and I think it is in David Murphy's programme as well, that the Minister for Finance contacted the director general arising out of concerns about that "Liveline" programme and a worry about a run on the banks and that sort of pressure. The Minister also contacted me directly, which was unusual. Normally, my contact with politicians would be informal or through the press representatives. It was a very proper and in no way inappropriate contact. The contact was to do with concerns that a Northern Rock-type panic might ensue in the aftermath of that programme. I had a very formal conversation with him in which I said that we had reported on the six o'clock news that there were concerns about money leaving institutions on that day. We were accurate in our reporting because we had checked it. In fact, two correspondents were working on the story at the time. I said that it was not my role or RTE's role to assure the public that the banks were okay; that was the role of the Central Bank, the regulator or the Minister. I said that if one of those people wanted to come on air to make those assurances, if they were to make it in time for the nine o'clock news we would make sure that would happen. What happened was that the Financial Regulator came out to RTE and did an interview with George Lee, and that was broadcast on that evening's nine o'clock news. He subsequently appeared on "Prime Time" the following week.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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In summary, the discussion did not have a direct impact on editorial policy or anything within-----
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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The remainder of my questions are mostly for Mr. Mulligan. I refer Mr. Mulligan to his opening statement in which he stated that property-related advertising accounted for less than 1% of total commercial revenue at its highest point in 2007.
He said the total for the financial institution category was less than 5%. I ask the witness to outline briefly those two categories from the point of view of property-related revenue in particular.
A lot of advertising in different forms of media comes from other categories that are not directly linked with property in terms of the actual construction sector, whether it is electrical supply companies, home furnishings or anything else. Does the 1% figure include those industries which were directly linked to construction but were not actually construction themselves?
Mr. Paul Mulligan:
No, I do not think so. When I am talking about property I am talking about actual people who were promoting property, such as estate agents - some of it was for foreign estate agents and some of it was for holiday homes abroad. There was very little and the figures were very small. It would not include-----
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Knock-on industries.
Mr. Paul Mulligan:
No. Knock-on industries - furniture or bedding or electrics - would not be included. They would be classified as household goods and services within our classification and not within property. Obviously the fact that more houses were being built and more people were occupying houses would have meant more advertising for household goods. To what extent that was lifted by the boom I could not say, but the answer to the question is that I am talking about pure property advertising.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I refer to the book by Donal O'Donovan and the Trinity professor Antoin Murphy, The Fall of the Celtic Tiger: Ireland and the Euro Debt Crisis.They write that the media experienced a boom in profitability associated with rapidly rising property-related advertising revenues. In light of what Mr. Mulligan has just stated, does he think that statement applies to RTE in the period in question?
Mr. Paul Mulligan:
Was there growth in the property sector? Yes. Was there growth in the financial sector? Yes there was, although most of the financial advertising at the time, when I look back, tended to be of a corporate nature rather than specifically about house buying or house purchase, although there would have been mortgage advertising as well. The degree to which broadcast media benefitted any way directly from the property boom is certainly exaggerated. When one looks at the major advertising categories at the time in the broadcast media, the main product categories at the time were things like food, retailers, toiletries and cosmetics, generally fast-moving consumer goods. The medium itself is not deemed to be as suitable for property-related advertising; we do not do supplements.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I have a final question. I refer to the remuneration structure within the marketing department in RTE at the time and salaries versus bonuses. What was that structure? Was it an incentive-based system for employees to get more advertising from property or other sectors?
Mr. Paul Mulligan:
There were bonuses in place. Most sales operations have targets and there are incentives to exceed the targets. Across the period 2004 to 2008 there would have been bonus schemes in place. They were not always there. Was there anyone targeting the property market? It was not a market that we ever saw potential in.
John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Yesterday we heard evidence from Harry Browne, who listed five or six programmes that RTE had on the air in the period we are talking about. Some were about overseas properties and some were about domestic properties. Advertising was sold during those programmes - often not directly related to property itself - but property and construction was a part of the programming make-up in RTE at the time. Surely this did have an impact that was greater than 1% on the revenues of RTE.
Mr. Paul Mulligan:
Within RTE there was certainly what was called a property stream of programmes. There were four of five different programmes, but these did not all run at the same time; some of them ran for two years and some for three years. They existed before the property boom. There are probably three programmes currently on RTE that have nothing to do with the property boom but are in the same area. They are there because the Irish people have a fascination - maybe not an obsession, which was the word used yesterday - but a fascination with property that is historically well based. There is a huge interest in property. It may not be unique to Irish viewers. Some of the commercial channels in the UK seem to specialise in property programmes and they are very popular. There is an interest in property programmes and in design and in developments in eco-housing. There is a huge interest in property. However, the advertising around those programmes was likely to be for soap powder, toiletries and cosmetics and other products. There was nobody selling houses around those programmes.
Marc MacSharry (Fianna Fail)
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I welcome the gentlemen and I thank them for their presentations. Yesterday, Dr. Julien Mercille of UCD said that RTE sustained the national obsession with houses. Would Mr. Mulligan agree with this view from his perspective within the commercial function of RTE?
Mr. Paul Mulligan:
I read some of what Dr. Mercille said and has written, although I did not buy the book. There is huge value in rigorous academic research in terms of looking at the issues that were around at the time and in learning the lessons so that we do not make the same mistakes again. That is what we are here today to talk about. However, I have some problems with his analysis of these things. To a large extent his analysis was not centred on RTE; it was centred on two very large business groups, The Irish Timesand the Irish Independent group. He says that by their very nature as big businesses, they were in cahoots with big business itself. He stated that that was a known fact. I did not see the proof for that fact in his analysis - it was a case of "That is a fact." His view is that because these newspaper groups were in bed with big business and property business, the only view that was ever going to be in their media was support for business and those financial and property businesses. However, in reality, The Irish Timesis read by 9% of the adult population in Ireland and the Irish Independentis read on a daily basis by 16% of the adult population in Ireland. There are local radio stations and local press in every county in Ireland that far exceed the kind of audiences that any of those newspapers have. Is there a supposition that these other media were part of the conspiracy too? If they were-----
Marc MacSharry (Fianna Fail)
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To focus on RTE specifically, as opposed to the philosophical issue, does Mr. Mulligan believe Dr. Mercille is right or wrong in what he is saying - that RTE sustained the national obsession with houses?
Marc MacSharry (Fianna Fail)
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I am limited in the time I have for questions. I will move on, because I think we understand Mr. Mulligan's view on that matter. Mr. Mulligan is in charge of revenue, and programming is something different. Is there ever a situation in which he sees that there is money in something and suggests doing a programme on X, Y or Z, such as property? Did this arise in that period?
Marc MacSharry (Fianna Fail)
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It is not about holes in the schedules; it is not a case of looking for a stocking filler for 4 a.m.
Would Mr. Mulligan have taken the view at any stage that there is money in property and we should look at developing programming around it? I do not need to name the programmes. Dr. Mercille named five or six of them yesterday. Do those conversations take place?
Marc MacSharry (Fianna Fail)
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They do not. So is it a matter of accident that a house-hunting programme might develop on programming. Who arrives at that decision?
Marc MacSharry (Fianna Fail)
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It was coincidental then that a number of programmes to do with house-hunting, designing and various things like that emerged over the period.
Mr. Ed Mulhall:
I will comment although it is not my area. Programmes, and particularly lifestyle programmes, also reflect - I think it would be wrong to pretend otherwise - what people are watching. Particularly in a schedule, one is looking for a mix of programming. Therefore, if a house buyers' programme or a house improvement programme is not being watched and is not going to be renewed, it is sitting beside consumer programming, "Check-Up" and that sort of programming, which falls within, and would be commissioned from, the same area.
While we are on it, and I am sure it will come up again, it is important to distinguish between the programmes. There was a list of programmes and they are different. There are ones that one could certainly say are boom programmes - at least, I would say they are boom programmes - like "House Hunters in the Sun" and there are other ones that are house improvement programmes. There was a deliberate editorial policy to shift from one to another in 2006 and 2007.
Marc MacSharry (Fianna Fail)
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There is never any commercial relationship or overlap-----
Marc MacSharry (Fianna Fail)
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-----even at board level, to say: "Do you think we should make a programme or programmes, or focus a little bit on education, science or property?"
Mr. Ed Mulhall:
There is discussion and certainly at television board level one is talking about trying. Science is a great example. RTE would have gone through periods when it was poor in its delivery of science programming, and there would be an effort to try to improve that. In terms of strands, that would be normal.
Marc MacSharry (Fianna Fail)
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I do not mean to cut across Mr. Mulhall, but my time is limited. In the relevant period, 2002-2007, would Mr. Mulhall say there were more programmes to do with owning a home, selling a home, doing up a home, looking at homes and living in homes than there were about "Boom", "Future Shock" or "Prime Time Investigates" to do with the property boom and bust?
Marc MacSharry (Fianna Fail)
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That question was for Mr. Mulhall first.
Marc MacSharry (Fianna Fail)
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Obviously, the news of the day can include that.
Marc MacSharry (Fianna Fail)
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Is it more or less, not counting the news?
Marc MacSharry (Fianna Fail)
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I am specifically not counting the news. Therefore, not including the news, but let us include "Prime Time", how many programmes were there on houses versus the boom?
Mr. Paul Mulligan:
From memory, I cannot verify exactly. I would say there were probably two house programmes a week. Some of them were on design, some on interiors and some may have been "House Hunters in the Sun". There might have been two programmes a week. There were two "Prime Times" programmes and there were news bulletins.
Marc MacSharry (Fianna Fail)
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Is it proportionate with what Dr. Mercille said, that in that period RTE sustained the national obsession with houses?
Mr. Paul Mulligan:
As I was trying to explain earlier, there were house programmes before there was ever a boom. There are house programmes on at the moment. I counted today that there are three house programmes in existence in the RTE schedule at the moment. The Senator is quoting Dr. Mercille as saying he listed five programmes and therefore they were all on every night of the week, but that is not true. They were on usually for periods of about six weeks, and they would be on one night a week. Then there would be another programme on one night a week.
Marc MacSharry (Fianna Fail)
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How many were there, just so that we are clear?
Marc MacSharry (Fianna Fail)
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How many episodes were in "Boom", or was it a one-off programme?
Marc MacSharry (Fianna Fail)
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Was "Future Shock" a one-off programme?
Marc MacSharry (Fianna Fail)
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So they were two one-off programmes. Was the Morgan Kelly "Prime Time" a one-off programme?
Marc MacSharry (Fianna Fail)
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No, I am asking about the one that Mr. Mulhall specifically referred to. He said it led to a "Prime Time" programme, so was that a one-off programme which dealt with that particular issue?
Marc MacSharry (Fianna Fail)
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Mr. Mulhall referred to it.
Marc MacSharry (Fianna Fail)
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No, but we are just trying to develop a picture of the period.
Marc MacSharry (Fianna Fail)
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The picture so far, and correct me if I am wrong, is that we have six-week stints of housing programmes. I am counting: we have one episode of "Boom", one episode of "Future Shock", and one episode of "Prime Time" dedicated to that issue. Is that correct or not?
Mr. Paul Mulligan:
If the Senator wants me to deal with this, I will deal with it because it is an important issue. I will go through a list of 120 programmes dealing with the issues related to the inquiry. Some 40 of them are in current affairs alone, and that is not counting radio programmes or other programmes that deal with the-----
Ciarán Lynch (Cork South Central, Labour)
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Mr. Mulligan may have 120 programmes but he has five minutes left.
Marc MacSharry (Fianna Fail)
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Mr. Mulhall will have plenty of time to talk later but I will not, so I want to keep to the point.
Marc MacSharry (Fianna Fail)
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Let us do it then.
Marc MacSharry (Fianna Fail)
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We do not have time for the list.
Marc MacSharry (Fianna Fail)
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Let us deal with proportion, as in percentages, rather than numerical.
Marc MacSharry (Fianna Fail)
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Mr. Mulhall answered that question, but I have now moved on to try to demonstrate for myself. I am not listening to yesterday's guy, I am trying to develop my own questioning.
Marc MacSharry (Fianna Fail)
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It seems to me, and correct me if I am wrong, that Mr. Mulhall is saying there were three programmes versus a series of programmes.
Marc MacSharry (Fianna Fail)
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Yes, of course.
Mr. Paul Mulligan:
Probably the longest-running programme that people will still be familiar with is "Room to Improve", which is running at the moment, and has run almost right through the series. If one looks at that programme and says: "You had one "Prime Time" which said the property boom is dangerous, and you had ten "Room to Improve" programmes", the "Room to Improve" programme had nothing to do with promoting the property boom.
Marc MacSharry (Fianna Fail)
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I did not say that.
Marc MacSharry (Fianna Fail)
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With respect, Mr. Mulligan has mentioned the examples, not me.
Marc MacSharry (Fianna Fail)
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He mentioned "Future Shock" and "Boom". Having read the complaints to the Broadcasting Authority of Ireland, which can be checked on its website, both of those programmes claimed from the outset to be portraying a hypothetical situation, rather than issuing a warning.
I have just read on the RTE website the description of the "Boom" programme for 1 June 2006. If Mr. Mulligan is going to draw from the past that these were big warning signs, I am merely asking him to tell me about all the other programmes that RTE was showing at the time, the frequency with which they were on, which were promoting house purchase versus the three individual occasions in the relevant period. That is all I am saying. I think we get the picture and I want to move on.
Ciarán Lynch (Cork South Central, Labour)
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The Senator has three minutes.
Marc MacSharry (Fianna Fail)
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At what time did the sponsorship of programmes begin in RTE?
Mr. Paul Mulligan:
The sponsorship of programmes goes way back. In the early days of radio all programmes were sponsored at one stage. Those of us who are old enough will remember all the sponsored programmes. As regards television, it was probably from the very early days. I could not say exactly, but the first sponsored television programmes were probably in the 1960s.
Marc MacSharry (Fianna Fail)
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In the relevant period, what were the typical contractual arrangements for sponsoring a current affairs programme?
Marc MacSharry (Fianna Fail)
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All right, okay. Or any programme for that matter.
Marc MacSharry (Fianna Fail)
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Mr. Mulligan can pick one.
Ciarán Lynch (Cork South Central, Labour)
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"The Late Late Show".
Ciarán Lynch (Cork South Central, Labour)
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It has product placement, as well.
Mr. Paul Mulligan:
It has product placement in it, yes. The product placement within "The Late Late Show" is usually the competitions. If one gets something of a value of more than €5,000, one must put that up as a notice to the viewers so it is clear that one got the prizes for nothing. That is a regulatory requirement.
To revert to the Senator's question, he asked me what was the arrangement.
Marc MacSharry (Fianna Fail)
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What are the typical contractuals? If I am to sponsor "The Late Late Show", what is in it for me?
Mr. Paul Mulligan:
From the Senator's point of view, there may well be a lot in it but from our point of view, we get an amount of revenue. In return for that revenue, the sponsor gets credits going in and out of the programme, which gives their message but basically, it must say this programme is sponsored by whoever it is.
Marc MacSharry (Fianna Fail)
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Could the marketing manager get me a slot on a show in June if I wanted it?
Marc MacSharry (Fianna Fail)
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I meant in terms of an interview on the panel.
Marc MacSharry (Fianna Fail)
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Mr. Mulhall mentioned the issue of hindsight bias. Who did he quote on that?
Marc MacSharry (Fianna Fail)
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Does Mr. Mulhall think that RTE's news reportage over the years, and perhaps even at present although that is outside the relevant period, was free of hindsight bias?
Marc MacSharry (Fianna Fail)
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To Mr. Mulhall himself? Does he think there were others or was it to absolve everybody?
Marc MacSharry (Fianna Fail)
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Absolutely. Finally, were competitions ever run that had property as a prize? Could one ever win an apartment, a valuation, the design of a house or a site?
Ciarán Lynch (Cork South Central, Labour)
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As the Senator is over time, I require a response.
Marc MacSharry (Fianna Fail)
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I thank the witnesses.
Ciarán Lynch (Cork South Central, Labour)
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I wish to raise one matter in respect of Mr. Mulligan's opening statement because he gave a summarised version of it. I wish to clarify one matter that was in the text but with which he did not deal. It is on the first page of his statement and states "As a dual funded organisation RTÉ is restricted in the amount of advertising it is permitted to broadcast to roughly half of that allowed to commercial broadcasters." What does that actually mean?
Ciarán Lynch (Cork South Central, Labour)
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I am trying to establish whether that is in monetary terms or in minutes.
Ciarán Lynch (Cork South Central, Labour)
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Mr. Mulligan will be aware of how, if one watches American television, one will see an advertisement every 15 minutes.
Mr. Paul Mulligan:
Yes, within the regulations, RTE is permitted on television to have 10% of its broadcast time as advertising. Commercial channels are allowed 20% and so that averages out at six minutes in the hour, as opposed to 12 minutes in the hour. On RTE radio, RTE is permitted to have 7.5% of its time in advertising, whereas local and commercial radio is allowed 15%. Therefore, it is half.
Ciarán Lynch (Cork South Central, Labour)
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To interpret that sentence correctly, Mr. Mulligan is talking about time accrued to programming, as opposed to the commercial value.
Ciarán Lynch (Cork South Central, Labour)
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I thank Mr. Mulligan and we will move on to Senator Barrett.
Sean Barrett (Independent)
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I welcome the witnesses. On the fifth page of Mr. Mulligan's submission to the committee, there is an item from 15 November 2006 referring to "I’m An Adult, Get Me Out Of Here" which states "No problems with Financial Regulator – lovely fit". What was that account about? What did that mean?
Mr. Paul Mulligan:
I explained at the beginning of my introduction that in order to make sure that we put into place our statement that there will not be any influence on our programmes, we have committees in place, one of which is a sponsorship committee. Usually, a proposal will come from our own sponsorship people who might say they are going to meet the Financial Regulator, which has expressed an interest in possibly doing something in RTE and whether it would be suitable for it to sponsor this programme. That would have been the request and I think the minute to which the Senator referred was from the minutes of such a meeting to say yes, it would be a lovely fit. As can be seen from other minutes I have dictated there, this is not always the case.
Sean Barrett (Independent)
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This committee is looking at the Financial Regulator and I am intrigued that he was making television programmes with RTE because we are trying to find the €64 billion that disappeared from this sector he was regulating. How many people from the Financial Regulator's office used to be involved in monitoring RTE's programmes?
Mr. Paul Mulligan:
None. There was no involvement of the regulator. Let me make this clear. The sponsorship committee within RTE would vet any proposal to ascertain whether it was a suitable sponsor. At the time the Financial Regulator as a sponsor came up as a concept. At the time, we had a programme called "It's Your Money" and the regulator has a site that is similarly called. The idea was whether it would be possible for the Financial Regulator to sponsor this, if it wished to so do. Discussions were held with the Financial Regulator and eventually it never happened. However, the reason the concept came up was because at the time, as the Senator may remember, the regulator was advertising with RTE. Most people will remember the guy standing up on the bus saying he did not know what a tracker mortgage was. The regulator was advertising the fact that it was trying to educate people in financial issues. The concept was about whether the regulator could advertise a programme and the note cited by the Senator said yes it could, it was a good fit.
Sean Barrett (Independent)
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I thought the man on the bus would be interpreted differently now, as they did not know what a tracker mortgage was and nor did a lot of people in the banks.
The next question may be to Mr. Mulhall. Would it be true that the business coverage, in particular as it relates to the Stock Exchange, is somewhat uncritical? In other words, it announces a glowing profit for company X but is not focused on whether that company rigged the market or gets massive subsidies or huge tax breaks or whatever.
Mr. Ed Mulhall:
It is very hard to generalise but as a listener, I would think the morning business slot on "Morning Ireland", which really is what the Senator is talking about and is the programme that most normally interviews companies or whatever about their results, is quite critical in terms of its questioning. Sometimes, some of the edgier questions with some of the bank officials over this period would have been in that slot because that was the only time in a lot of cases that bank chief executives were available for interview.
Sean Barrett (Independent)
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I thank Mr. Mulhall for his document, which I hope he puts into book form at some stage, particularly around page 7. As a general question, of all the lessons that Mr. Mulhall was watching and in which he was participating, how would he advise the committee on measures to prevent a recurrence? What should we do the next time, to make sure this €64 billion bill, which both the Oireachtas and society as a whole were obliged to face, never again arises?
Mr. Ed Mulhall:
That is a very big question. As for the committee's work, it remains to be seen what will be the impact of its recommendations. Obviously, much of how the committee's work is reviewed will come from the nexus phase and the conclusions the joint committee draws from that period. I also have an interest, to which I alluded at the end of my statement, on the policy side of what are the conclusions from this committee because frankly, the structures may change and may alter a bit but it really is on the legislative side that the members of this committee can have the most direct input. The joint committee has spokespeople present who more than likely will be spokespeople for the parties in the next election and they will have an ability to bring what they have learned from this committee's deliberations into that campaign. The policy failures of this period probably are as interesting as some of the other sides of the equation.
Sean Barrett (Independent)
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I thank Mr. Mulhall and Mr. Mulligan.
Joe Higgins (Dublin West, Socialist Party)
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I refer to those programmes that have been mentioned, such as "I’m An Adult, Get Me Out Of Here", "House Hunters" etc. One of those programmes was presented by a person who was the managing director of a property finance company and was a mortgage broker.
In the course of those programmes, he would have been encouraging people to go out and buy, for example, just before the 2007 general election. These programmes were aired late on in the boom cycle. Did RTE have any concerns about a conflict of interest in terms of broadcasting a programme about buying houses which was presented by someone with a direct business interest in the mortgage market?
Mr. Paul Mulligan:
I think the programme the Deputy is talking about is "I'm an Adult, Get Me Out of Here!". That programme was presented by someone who was an expert in trying to advise people. The programme, for those who do not remember it, centred on people in their 20s who had spent long enough at home, who wanted to move out but did not know what they could do, what they could afford or how they would go about it. One could call that pushing the property market but I would call it consumer information. I understand that-----
Joe Higgins (Dublin West, Socialist Party)
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There were other programmes including "House Hunters" and "House Hunters in the Sun". The presenter of the former programme, in a web chat on RTE's website in May 2007, wrote "... buy now, buy if you can ... Supply in property is currently outweighing demand and there could be deals to be done". She also wrote, "My advice is to buy now ... should the next government abolish stamp duty for first timers this will simply put the price of properties for first time buyers ... UP!" and "I suggest buying now before buyers come back to the market". The presenter was asked, "Do you think that the property market could crash?" and replied as follows: "No ... I don't think any government can afford to let that happen. A levelling off is what we are seeing." This was in May 2007. Again I raise the issue of a conflict of interest because this was someone who was not a so-called expert but a player in the property scene. The first-time buyers who were being given advice in 2007 may have acted on that advice, just before the bubble burst and finished up in serious negative equity. Does Mr. Mulligan think that RTE might have some responsibility for that disaster?
Joe Higgins (Dublin West, Socialist Party)
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They came from a web chat on RTE's website in May 2007.
Mr. Paul Mulligan:
I am just making the point that they were not part of the broadcast programme. Did young people buy property in 2007 that tumbled in value? Yes, they did; of course they did. Did the people making those programmes or the experts know this would happen? I do not know but I do not think so. There is a little bit of hindsight at play here in the sense that we know the bubble burst. The question was, when did it happen? It was probably going to happen and whether one was in before it or after it determined whether one was left with a burden or an asset. I wish we all knew then what we all know now but we did not.
Joe Higgins (Dublin West, Socialist Party)
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Some of RTE's most prominent current affairs presenters are on the record as having invested heavily in the property market. Does Mr. Mulhall believe there should be a register of interests and liabilities for current affairs presenters on RTE or, indeed, generally?
Joe Higgins (Dublin West, Socialist Party)
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There are some things that people could not know during the bubble, but one thing that was known was the price of homes and how that was inflating. Our researchers show concretely that from 1996 to 2006, the price of a home for an average working person went up each year by the equivalent of the average industrial wage. That happened every year for ten years. That was put down, in many quarters, to rampant speculation in land and rampant profiteering.
Ciarán Lynch (Cork South Central, Labour)
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Can we have your final question please, Deputy?
Joe Higgins (Dublin West, Socialist Party)
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That had a huge impact in enslaving young people with 40-year mortgages and unsustainable levels of debt. Did RTE ever launch an investigative journalism project or initiative to uncover the kind of rampant profiteering that was going on in land speculation and the housing industry, considering the detrimental and hugely negative social impact that had on young people in particular?
Mr. Ed Mulhall:
My answer to that would be "Yes". There were two "Prime Time Investigates" programmes specifically dealing with the issue of planning. I will pass on the dates for those programmes to the committee. There was also a "Prime Time Investigates" investigation into housing agents and one on mortgage products arising out of the sub-prime issue. There were two big investigations, one early in the "Prime Time Investigates" series and one subsequently. In the period immediately after the crash, there was one specifically on building, builders and speculation, as well as one on the banks. There were a number of specific programmes and the ones to which I am referring were fully fledged "Prime Time Investigates" type programmes.
Joe Higgins (Dublin West, Socialist Party)
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Have I time for another question?
Ciarán Lynch (Cork South Central, Labour)
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No.
Susan O'Keeffe (Labour)
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To follow up on the conflict of interest register, at what point was that introduced and what was the implication for a presenter or journalist if he or she registered an involvement with or a stake in a company?
Susan O'Keeffe (Labour)
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Okay. Did journalists at RTE declare conflicts of interest?
Susan O'Keeffe (Labour)
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To go back to my colleague's question, there are people on the record who were known to have had big-----
Susan O'Keeffe (Labour)
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I can think of two but they were known to have had big property investments.
Susan O'Keeffe (Labour)
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Was that noted or known? Would RTE have perceived that to be a conflict of interest?
Susan O'Keeffe (Labour)
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In short, if a journalist was involved in any sort of property speculation, he or she was not obliged-----
Susan O'Keeffe (Labour)
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How about particular-----
Susan O'Keeffe (Labour)
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How about particular journalists who had sponsorship deals with car and property companies? How did RTE account for them?
Susan O'Keeffe (Labour)
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I cannot name them but I do know this to be true because they told me themselves. That is how I would know and I am wondering how-----
Susan O'Keeffe (Labour)
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If they did not declare it, Mr. Mulhall had no way of knowing. Is that right?
Susan O'Keeffe (Labour)
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The "Drivetime" programme on RTE radio has had a series of sponsorship deals with three different banks. How did that come about, given that it is a current affairs programme in a prime time slot?
Mr. Paul Mulligan:
In terms of the regulations on sponsorship of programmes, news and current affairs programmes on television cannot be sponsored at all. News programmes on radio cannot be sponsored but current affairs programmes can. That is the Broadcasting Authority of Ireland, BAI, code and is not of RTE's making.
Some radio programmes throughout the country and other national radio are sponsored.
Susan O'Keeffe (Labour)
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How could RTE allow what is effectively a current affairs programme, "Drivetime", it talks about current affairs, to be sponsored by a bank? How could RTE's editorial hat allow a bank, any bank, at any time to sponsor that programme? How could that be? It does not matter about the guidelines but the editorial instinct.
Ciarán Lynch (Cork South Central, Labour)
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Two minutes remain.
Susan O'Keeffe (Labour)
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With due respect to Mr. Mulligan, I do not think one can compare a bank with a soap powder manufacturer.
Susan O'Keeffe (Labour)
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On page 7 of his contribution Mr. Mulhall said, "Throughout this period in RTE news we were just reporting what was happening." Would it be reasonable to say that RTE was not ever simply reporting but that the language that might be used in a report, the pictures used, the duration of the report and the position in the bulletin and that those things had a hand, act and part in how any report was given any precedence in RTE?
Susan O'Keeffe (Labour)
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May I clarify an issue? When Mr. Mulhall talked about the run on the banks story a little earlier, I think he said he stood by his editorial position but said if they wanted to send the Financial Regulator on the programme that was okay. Did I understand that correctly? I was not quite clear on that.
Susan O'Keeffe (Labour)
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How was that not being influenced by the Minister, if Mr. Ed Mulhall then said to the Minister, "Yes, absolutely, Minister if you need it we will let them."?
Susan O'Keeffe (Labour)
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That is why I am asking.
Mr. Ed Mulhall:
The Financial Regulator was interviewed by George Lee for the "Nine O'Clock News". I think that was the first interview that the particular Financial Regulator had done in the course of those events and then subsequently he was also on "Prime Time" where he was asked questions about the banking sector. He was part of the story, of course, one would want to get him on.
Susan O'Keeffe (Labour)
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Sorry, in the interests of clarity, was it the Minister who suggested the Financial Regulator or Mr. Ed Mulhall?
Susan O'Keeffe (Labour)
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Rather than RTE say it. That is what I am trying to get at.
Mr. Ed Mulhall:
I wanted someone to say it. We had been trying continually right through that period from a good while back to get the director of the Central Bank or the Financial Regulator to discuss what was then a growing concern within the banking sector. In fact, that started a little earlier. This is in the immediate aftermath of the Lehman's period but there had been concerns about some of the banks prior to that.
Susan O'Keeffe (Labour)
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I thank Mr. Mulhall.
Ciarán Lynch (Cork South Central, Labour)
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I want to refer back to something regarding the advertising model because I think there is a clear distinction that needs to be made in regard to a broadcast media as opposed to print media. Perhaps Mr. Mulhall might clarify this for us. In print medium circumstances one buys a quarter of a page or an eighth of a page and if the advertising comes in quick and fast, one just prints more pages. On television and radio there is a limited slot. In terms of the laws of supply and demand, one cannot broadcast the 25th or 26th hour in the day as there are only so many hours in the day that one can broadcast and the time is very controlled in terms of how much one can allocate. How does that work? Does the price of advertising increase because the demand becomes higher?
Ciarán Lynch (Cork South Central, Labour)
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As a rule, does the price go up? Is that it?
Mr. Ed Mulhall:
The price does not go up, it is fixed at the moment. Many years ago we had a kind of an auction basis system where when the breaks got full if someone was willing to pay a higher price, there was a churn. That does not happen at the moment. What we have at the moment is a fixed price. We try to forecast months in advance what the demand and supply are likely to be and we fix the price.
Ciarán Lynch (Cork South Central, Labour)
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The question I am trying to get to is this. During 2000 to 2007 was there a measurable increase in the price of, say, the 30 second slot?
Ciarán Lynch (Cork South Central, Labour)
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Was there a very measurable increase in the price of that slot during prime time viewing compared to what it is now?
Ciarán Lynch (Cork South Central, Labour)
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Would it be half what it is now or twice as much?
Ciarán Lynch (Cork South Central, Labour)
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So there is a 40% drop in prime time advertising.
Ciarán Lynch (Cork South Central, Labour)
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Thank you.
Michael D'Arcy (Fine Gael)
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May I ask Mr. Mulhall if "Boom" was the first of its type of programme, a single issue one-hour long programme, commissioned by RTE during that period?
Michael D'Arcy (Fine Gael)
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Talking about specially commissioned programmes for just one item.
Michael D'Arcy (Fine Gael)
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The "Boom" programme was aired on 1 June 2006.
Michael D'Arcy (Fine Gael)
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The analysis was by whom and how long did it take for the programme?
Mr. Ed Mulhall:
The analysis was done by George Lee. There were a number of contributors to the programme - Padraic White, Tom Garvin, Brigid Laffan, John Farrell, Sean Dorgan, etc. I apologise for getting tied up in a numbers game with Senator Mark MacSharry earlier. The reason I used "Boom" as an example was that I was trying to make the point more in terms of the focus, because I was asked in the earlier questions when I got focused in on the issue myself. I discussed with George Lee at the time the analysis he was doing with the period. If one goes back and looks at what he said in his own presentation within that programme, clearly it deals with an awful lot of the core issues. It puts in a historic context what is in the euro context. It deals with the fact that the problems in the property market predated 2001. I know I am taking up the time of the committee but there is a lot of stuff in it and it was done by George Lee.
Michael D'Arcy (Fine Gael)
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The reason I have used it is that in previous evidence - I cannot remember which witness gave it - it was stated that was the end of the period where something could have been done. May I ask about RTE? Was there any special programme similar to "Boom" or "Future Shock"
on social partnership?
Michael D'Arcy (Fine Gael)
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Mr. Mulhall-----
Mr. Ed Mulhall:
I have not checked in terms of those. I have a list of all the "Prime Time" programmes and quite a few deal with the social partnership issue at the time because the pay talks were going on, there was the benchmarking and there was a special on the issues in and around benchmarking. The "Prime Time Investigates" programme done by the late Mary Raftery about public spending at that time falls into that same category.
Michael D'Arcy (Fine Gael)
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In particular these fall into the period between 2002 and 2007 when there were two programmes.
Michael D'Arcy (Fine Gael)
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Was there any special programme on the narrowing of the tax base?
Mr. Ed Mulhall:
The tax base was a central element in the "Boom" analysis. The whole point of the analysis in that programme was the shift in taxation and the dependence of the State on property-related taxation. He then went into scenarios - if there was a reduction in the number of houses being sold and the impact in terms of revenue and employment over a five-year period.
Michael D'Arcy (Fine Gael)
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Was there any specific programming on the SSIA scheme?
Ciarán Lynch (Cork South Central, Labour)
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Two minutes remain for Senator D'Arcy.
Michael D'Arcy (Fine Gael)
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In page 22 of Mr. Rob Wright's report, the conversation starts with the Minister and his officials within the Department of Finance where the projected spending was and where it eventually got to. Was there any specific programming in that same period about the expenditure by budget time?
Michael D'Arcy (Fine Gael)
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Does Mr. Mulhall have any information about exactly what the percentage breakdown of the programming was?
Michael D'Arcy (Fine Gael)
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Mr. Mulhall was with RTE in the 1970s. Is that the case?
Michael D'Arcy (Fine Gael)
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Half of the members of this committee were born in the 1970s. I am simply making the point that Mr. Mulhall is an experienced editor. What was his view in respect of the comment by a previous Taoiseach to the effect that the people talking down the economy should consider suicide?
Mr. Ed Mulhall:
It was a very unfortunate and insensitive remark. I think he regretted it very quickly himself. The reason we quote it - I quoted it in my longer statement - is that it was indicative of a certain attitude to people who were criticising or seen to be critical of the economic policy of the time. It was not the first time that a similar comment was made. In fact, let us consider the "How We Blew the Boom" programme again. I do not want to keep coming back to it, but there was an equivalent comment the following Sunday directly about the boom programme from the Taoiseach. In George Lee's contribution to the O'Donovan book, he sees that comment as indicative of comments he was getting from political circles in that period.
Pearse Doherty (Donegal South West, Sinn Fein)
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Cuirim fáilte roimh an bheirt go dtí an fiosrúcháin. There has been much talk about residential property over the last period and in today's evidence as well. I want to tease out the role that commercial property played. We have heard evidence to the effect that commercial property played a fundamental role in the crisis. To Mr. Mulhall's knowledge, did RTE cover programmes about the building up of the Irish commercial property market?
Mr. Ed Mulhall:
To be perfectly honest, to give a proper answer to that I would have to have a better analysis of the programming. Certainly, it was a feature in terms of dealing with the wider planning issues related to the programmes that I outlined earlier. I am trying to remember. There was a segment on commercial property in "Future Shock: Property Crash" but I cannot remember a specific programme in that period dealing directly with commercial property. Actually, there were programmes relating to some of the big housing developments. I suppose they would come into that category but I would need to do a little more research to give a specific answer.
Pearse Doherty (Donegal South West, Sinn Fein)
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I understand that Mr. Mulhall would need to do more research, but the programmes we are discussing relate in the main to house building and house buying. Is that not the case?
Mr. Ed Mulhall:
Some of the big investigative programmes such as the "How We Blew the Boom" documentary were taking things in a more macro way and more globally. The investigation I was referring to in terms of people selling property was really targeted at estate agents. It was directly involved with individuals, as was the mortgage-related programme on borrowing. There is a difference between the different categories.
Pearse Doherty (Donegal South West, Sinn Fein)
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RTE has done many great investigative programmes down throughout the years. One of the issues that we are dealing with in this inquiry is the nexus, the connection between developers, bankers, politicians and so on. Was this under consideration in any way? Did the broadcaster ever investigate that nexus in the period under discussion?
Mr. Ed Mulhall:
Again, this refers back to Deputy Higgins's point. The planning programmes that I mentioned dealt with that nexus in terms of planning issues. One programme directly related to the committee investigation was "Prime Time Investigates: Meet the Bankers", which aired immediately after the guarantee in early 2009. That dealt directly with two big financial institutions among those involved in the nexus phase. That programme had details about how the Financial Regulator dealt with them. It was revealed in that programme how the regulator dealt with loans to businesses and other people, including politicians.
Pearse Doherty (Donegal South West, Sinn Fein)
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There has been much talk about "Future Shock: Property Crash". I am more interested in the aftermath of the programme. Mr. Mulhall has referred to the comments of the former Taoiseach, Bertie Ahern, after "How We Blew the Boom". After "Future Shock: Property Crash", he also said something to Matt Cooper. It is mentioned in Matt Cooper's book, Who Really Runs Ireland?. I understand it was on the radio show as well. He said that it was irresponsible and inaccurate and that he disagreed with almost everything in it. The Construction Industry Federation had released a statement shortly afterwards. The valuation body had taken up the issue of bias, which was not sustained. Was there any direct contact from anyone within political circles or people acting for them to RTE in respect of "Future Shock: Property Crash"?
Mr. Ed Mulhall:
I will have to add a caveat along the lines of what I said earlier. I was not directly responsible for the programme and, therefore, it would not be to me that they would go, although the likelihood is that they probably would have gone to me or to the editor of current affairs. I do not have any recollection of any direct contact relating to that programme. In fact, most of the heat - to put it that way - in terms of the programme was in full glare. Everything was done through public statements, complaints and articles in newspapers. It was not hidden in any sense.
Pearse Doherty (Donegal South West, Sinn Fein)
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Mr. Mulhall referenced Patrick Honohan's interview on "Morning Ireland" earlier. Mr. Mulhall should correct me if I am wrong, but we understand that followed an unsolicited call to RTE and that he was the person who instigated the call. Is that the case?
Pearse Doherty (Donegal South West, Sinn Fein)
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In the aftermath of the interview - again, I will repeat the previous question - did Mr. Mulhall have any contact or is he aware of whether any contact was made to RTE in respect of that interview by anyone within the political establishment or someone acting on behalf of it, or any others?
Pearse Doherty (Donegal South West, Sinn Fein)
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Thank you.
Eoghan Murphy (Dublin South East, Fine Gael)
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My thanks to both witnesses for attending today. I wish to follow on from Deputy Doherty's questions about "Morning Ireland". I suppose that interview by the Governor, Professor Honohan, is an important moment in our history. Some would argue that it was in the public interest but others argue that it was not in terms of the timing. Are there internal controls in "Morning Ireland" or in RTE that would decide whether to allow him on? Does someone get a telephone call? Is there something to check?
Mr. Ed Mulhall:
The decision in terms of putting anyone on air is made by the editor of the programme. In cases where there is a particularly sensitive issue, I have described how the editorial line goes. If there was a particular sensitive issue relating to a legal matter, a balance issue or something like that, it might go up. In the case of "Morning Ireland" it might go up to the series editor of "Morning Ireland", escalate to the managing editor of radio or up to me. That is the chain in terms of "Morning Ireland". In the case of something like the Governor of the Central Bank wishing to make a statement on a matter of extreme current interest, it would be a very straightforward decision by the editor to make the decision himself to put him on.
Eoghan Murphy (Dublin South East, Fine Gael)
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They did not escalate it. Is that the case?
Eoghan Murphy (Dublin South East, Fine Gael)
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Was Mr. Mulhall concerned that he had not been notified of it?
Eoghan Murphy (Dublin South East, Fine Gael)
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Mr. Mulhall was subsequently informed about the seriousness of it.
Eoghan Murphy (Dublin South East, Fine Gael)
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It was incredibly significant though.
Eoghan Murphy (Dublin South East, Fine Gael)
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Would people have contacted Mr. Mulhall and the editorial team on another issue but not on this one?
Eoghan Murphy (Dublin South East, Fine Gael)
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I understand if things are moving quite quickly one does not have the opportunity to reflect.
Eoghan Murphy (Dublin South East, Fine Gael)
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Is Mr. Mulhall aware of criticism from certain quarters that the timing of the announcement was not in the public interest?
Mr. Ed Mulhall:
I am aware of criticism of Professor Honohan, that he was stepping out of his appropriate line, but in that period of time there was so much confusion in terms of what people were saying and what people were not saying on the issue, that it was a welcome clarification. Certainly, from the journalistic end of it there was real frustration that people were not being straight in terms of replying to questions or not answering questions that they were being asked.
Eoghan Murphy (Dublin South East, Fine Gael)
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Did anyone from a Government department or any senior Government sources contact Mr. Mulhall to clarify why they perhaps were not being straight, for example because of certain sensitivities?
Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Chair and welcome Mr. Mulhall and Mr. Mulligan and thank them for their time. Mr. Mulhall referred earlier to the "Liveline" programme of Thursday, 18 September 2008 during which there was discussion of the security of people's deposits in the banks and people deciding to take their money out. Rumours were running wild at that stage and it was reported at the time that the late Minister, Brian Lenihan, actually phoned the director general, Cathal Goan. Mr. Mulhall said the Minister phoned him also. Could he clarify that, first of all?
Michael McGrath (Cork South Central, Fianna Fail)
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What was his core message to Mr. Mulhall when he phoned him?
Mr. Ed Mulhall:
His core message, which I tried to describe earlier on, was a very measured message and I did not find it in any way improper. Because of his training, the Minister was very careful in what he said. I do not want to paraphrase him inaccurately because I did not take a note of what he said. He had concerns about the banking sector and he believed that what had developed in the "Liveline" programme would cause problems for the banks and that there needed to be some balance put into the issue. That was a developing story that day. Two of our correspondents were aware of what had happened on "Liveline" and had checked it out with a number of the institutions involved. So there was a real concern around the story. In terms of the story we did at 6 p.m. that day, we were quite careful in terms of how we phrased it. The Minister and I then had an exchange during which I said that there were a number of people who could be interviewed about it.
Michael McGrath (Cork South Central, Fianna Fail)
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I think there was talk on the show of people taking money out of the banks and putting it under the mattress or burying it in the garden. It was reported subsequently that within 24 hours, about €50 million had been transferred into An Post guaranteed State savings products. It was also reported that the production team of "Liveline" were rebuked by senior management at RTE because they planned to continue with the topic of the safety of bank deposits the following day on Friday, 19 September 2008, and they were prevented from doing so. Is that the case?
Michael McGrath (Cork South Central, Fianna Fail)
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Is Mr. Mulhall aware of meetings that took place later?
Michael McGrath (Cork South Central, Fianna Fail)
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Is Mr. Mulhall aware of whether they had planned to cover the topic again the following day-----
Michael McGrath (Cork South Central, Fianna Fail)
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-----and ended up not covering it?
Michael McGrath (Cork South Central, Fianna Fail)
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Then on Saturday, 20 September 2008, the deposit guarantee limit was increased from €20,000 to €100,000?
Michael McGrath (Cork South Central, Fianna Fail)
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Mr. Mulhall asks in his opening statement on page 2, "Could we have done it better?". He outlined the role of RTE as a public service broadcaster and he indicated that it could have done better. What could have been done better in his view?
Mr. Ed Mulhall:
I think I have been clear enough in my statement. I think all journalists would feel that there was a story around what was happening within the banking sector that we were not able to get at. That was a failure. There are also issues, which I have outlined, in terms of the wider structural and administrative issues and the relationships within the international banking sector that could have been explored in more detail.
Michael McGrath (Cork South Central, Fianna Fail)
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Would it have been put to the Department of Finance, the regulator or the Central Bank that the dependence of the banks on property-related lending posed a risk to the economy and the financial stability of the State?
Michael McGrath (Cork South Central, Fianna Fail)
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Yes.
Michael McGrath (Cork South Central, Fianna Fail)
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In hindsight, does Mr. Mulhall think that during the general election campaign and debates of 2007 all of the political parties were sufficiently challenged on the proposals that they were making at the time, for example, around income tax cuts, the effect of abolition of stamp duty for first-time buyers, major spending commitments, at a time really which was beyond the peak of the economy? Does Mr. Mulhall think that the right hard questions were asked about the sustainability of the policies that were being promoted by the main parties at the time?
Mr. Ed Mulhall:
I will say, and I have alluded to this in some of my statements, that I found that particular campaign really frustrating in terms of the issue. I remember going around to the finance briefings of most of the parties during the course of that campaign. I asked George Lee, who did a number of set-up points both for news and programmes, to ask again about the issues around taxation during that campaign. I remember I met him at one of these briefings - I cannot remember which one - and he said, "I just keep getting the same answer back; they won't deal with the issue." To answer the Deputy's question about whether it was rigorous enough, I think it was rigorous. It came up in the issues. It was in the leaders' debate. It was in the set-up packages that were done for "Prime Time". There was specific discussion of the topic but it did not seem to have much impact.
Ciarán Lynch (Cork South Central, Labour)
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Deputy McGrath raised the issue of the Joe Duffy show. In light of the significance of that afternoon, was an expert, who could give an informed opinion, sought either prior to or during the broadcast, rather than having people ringing in and talking anecdotally over the phone about the sky falling in?
Ciarán Lynch (Cork South Central, Labour)
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Is it a programme that carries experts as part of its scheduling?
Ciarán Lynch (Cork South Central, Labour)
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Does it ever feature experts?
Ciarán Lynch (Cork South Central, Labour)
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In Mr. Mulhall's view, given the magnitude of the content of the programme that day, should an expert have been on that programme?
Mr. Ed Mulhall:
In a programme such as that in a developing story in a sensitive climate I think it is good practice to have a follow-up programme to balance out the views on the subject.
If people are saying they are taking money off one institution I would be surprised that a very experienced and well tuned programme like that is not trying to check that out.
Ciarán Lynch (Cork South Central, Labour)
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If I recall correctly, in the 2007 election RTE assigned a journalist to each party leader who stayed with them practically all day long.
Ciarán Lynch (Cork South Central, Labour)
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Was that particular to that election?
Ciarán Lynch (Cork South Central, Labour)
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I will go through the format of that election. The "Six One News" would come on and I believe Charlie Bird was with Bertie Ahern -----
Ciarán Lynch (Cork South Central, Labour)
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My apologies, that was 2002.
Ciarán Lynch (Cork South Central, Labour)
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That journalist would come on and give a commentary of that party and its leader's activities for the day.
Ciarán Lynch (Cork South Central, Labour)
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In hindsight, did Mr. Mulhall believe that was a good format?
Mr. Ed Mulhall:
Because of the style of campaigning, with party leaders going around the country, I believe it is a sensible deployment of journalists to have them follow things in case something happens. There were a number of occasions during all those election campaigns, but particularly during that campaign, where significant and unexpected things happened on the campaign trail.
Ciarán Lynch (Cork South Central, Labour)
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Were the journalists following them or were they on the campaign bus?
Ciarán Lynch (Cork South Central, Labour)
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My recollection is that they were literally on the bus.
Mr. Ed Mulhall:
With RTE journalists I would be surprised if they were on the bus all of the time because the nature of RTE journalists' job is that they are filing copy for "News at One", radio, television or getting to a satellite or a regional studio. Consequently they would need to be under their own steam.
Kieran O'Donnell (Limerick City, Fine Gael)
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I wish to ask Mr. Mulligan a couple of questions around the public television licence fee. Am I correct in saying that 50% of RTE's income comes from the public television licence fee?
Mr. Paul Mulligan:
Yes it does. It changes over time obviously and it changed over this particular period too. At the beginning, or before the boom at say 2002, it was about 50-50. Obviously as commercial revenue increased the licence fee decreased in proportion - not hugely but it would have gone down to about 44% instead of 50%.
Kieran O'Donnell (Limerick City, Fine Gael)
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So two thirds of the income would have come from -----
Kieran O'Donnell (Limerick City, Fine Gael)
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So about 55% of RTE's income would come from -----
Kieran O'Donnell (Limerick City, Fine Gael)
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How would RTE determine the allocation over various programmes?
Mr. Ed Mulhall:
Licence fee revenue is earmarked for pure public service output. Programmes such as general middle of the road programmes, religious programmes, children's programmes - programmes that do not have any financial involvement or are not entertainment programmes. All news and current affairs would be earmarked from the licence fee.
Kieran O'Donnell (Limerick City, Fine Gael)
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What about a situation with a programme like "Drivetime"? It was sponsored by various banks over the years - HSBC in 2009, Danske Bank in 2012 and Ulster Bank more recently. "The Business" is sponsored by Bank of Ireland and various other things are sponsored by banks. Would the sponsorship they provide be used in those specific programmes?
Kieran O'Donnell (Limerick City, Fine Gael)
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Does RTE get roughly €180 million or €190 million a year in licence fees? Does the witness believe RTE has a higher duty of care and responsibility in what is broadcast and who it takes on as sponsors?
Kieran O'Donnell (Limerick City, Fine Gael)
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Over that time RTE would have had programmes going out which were sponsored by banks.
Kieran O'Donnell (Limerick City, Fine Gael)
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HSBC was sponsoring "Drivetime".
Kieran O'Donnell (Limerick City, Fine Gael)
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Yes.
Kieran O'Donnell (Limerick City, Fine Gael)
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The first? RTE had no involvement with financial institution sponsors prior to that date?
Kieran O'Donnell (Limerick City, Fine Gael)
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They were sponsored by the banks?
Kieran O'Donnell (Limerick City, Fine Gael)
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Would there ever have been an occasion when a sponsor made a phonecall to Mr. Mulhall when it was unhappy about a particular issue being covered on RTE?
Mr. Paul Mulligan:
When RTE signs contracts with sponsors it is very clear in the contractual clauses that RTE maintains and holds editorial control over everything in the programme. We would never vary on that clause no matter what the sponsorship was, even in relation to the programme that they may sponsor.
Kieran O'Donnell (Limerick City, Fine Gael)
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Do the witnesses feel there was never any conflict of interest, or a situation of compromise in broadcasting, by having sponsorship from financial institutions over the years, in any shape or guise?
Mr. Paul Mulligan:
In relation to sports there was certainly not any conflict. In 2009, HSBC was one that took a fair amount of discussion in RTE. The sponsorship itself was about business banking and mainly about businesses wanting to expand abroad. It was not concerned with commercial banking in Ireland.
Kieran O'Donnell (Limerick City, Fine Gael)
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Dr. Julien Mercille has been referenced a number of times at this inquiry. He gave evidence to the inquiry that the news organisations largely conveyed the views of a political and economic elite. How would RTE answer that?
Mr. Paul Mulligan:
Academic research is valuable and the results of it should be valued. It is difficult when one starts research from the basis that there are elites and they are all in cahoots together - the results of the research are there before one does any factual analysis. Dr. Mercille may have something to say about the major press groups, and I know the committee has spoken to them earlier, because they did benefit more directly from the property market, but RTE did not. RTE had no vested interest in it and there was no contact with developers or auctioneers in any of RTE's commercial activities across that period. The cement that may have been there with other media was not there in the broadcast media, to build that contact one would like to propose. I do not say this just about RTE, I believe it was true of all the broadcast media.
Kieran O'Donnell (Limerick City, Fine Gael)
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In his research Dr. Mercille says that between 2000 and 2007 there were 717 "Prime Time" programmes in total. He said that only ten of the programmes had segments dealing with the housing boom. He goes on to say that in those ten programmes 26 guests appeared, 11 from property or financial sectors. What would the criteria need to have been for RTE as a public sector broadcaster, to have done more programmes over that period to deal with the housing bubble?
Mr. Ed Mulhall:
There are two answers to that. I am sorry to cut into the Deputy's time, I do not want to get him into trouble, but I need to take a little time to answer the question. I would quibble with the classification that Dr. Mercille uses. I had a researcher go through the "Prime Time" programming from that period. It is vastly more coverage than Dr. Mercille says it is. I gave the committee the figure of 120 programmes related to the inquiry, of which a third - 40 programmes - related to property alone over that period of time. I am not disputing with him, but if one looks at Dr. Mercille's analysis, and the Chair showed the analysis in terms of newspapers, Dr. Mercille is doing a word search for the newspapers. He is only allowing for the word "bubble" and not allowing for the word "boom" and that affects the issues around the numbers.
Kieran O'Donnell (Limerick City, Fine Gael)
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How many of those 120 programmes does Mr. Mulhall believe would have struck a cautionary note on housing rather than being cheerleading?
Mr. Ed Mulhall:
Of the 220 programmes, 80 of them are to do with the wider economic issues such as banking. Many housing related programmes had a cautionary element, about prices rising, affordable housing, rent, planning, and the wider Morgan Kelly, Alan Ahearne, George Lee and David McWilliams issues.
Ciarán Lynch (Cork South Central, Labour)
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I will put to Mr. Mulhall a summary of a number of questions put to every witness at the end. RTE comes in a particular box, being publicly owned and State-operated. Is it assumed this comes with a higher level of responsibility than the private sector?
Ciarán Lynch (Cork South Central, Labour)
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Mr. Mulhall has given some evaluation of his role during the crisis period with that space in the Irish medium. Having reflected on the 2002 to 2007 period in the space RTE holds in Irish media, are there lessons being taken from that period that RTE will apply to itself as national broadcaster in future? Could this inquiry take lessons into the future in terms of some recommendations, legislative requirements, policies and support?
Mr. Ed Mulhall:
I am no longer involved in RTE so that caveat is there. I am very proud of the journalistic work done by specialists during that period at a time when many other things were difficult. I have genuine concerns about the maintenance of specialties within journalism and public broadcasting. That is an ongoing concern and there are issues about the transparency of how broadcasting is regulated and funded. I have concerns about these things and, even with the flawed performance of RTE in news and current affairs, I have concerns for the future about whether we will be able to sustain the investment required for these. It is not just about here but also internationally. There was a big international component to this so it is a major challenge for public broadcasting.
I have also gone into the other side of the question, about the inquiry. There is a major challenge in respect of fact finding in the nexus phase. The inquiry can have a real impact on an area where it has the power within its parties. For example, Deputy Michael McGrath asked me about the previous election in 2007. It would be good journalistic practice to have some way whereby party promises could be evaluated by some independent body that people buy into in order that we can get away from one party promising to cut something without it being costed or evaluated. That would assist matters, as happens in Holland.
Ciarán Lynch (Cork South Central, Labour)
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I thank Mr. Mulligan and Mr. Mulhall for their engagement with and participation in the inquiry. It has been informative and invaluable and has added to our understanding of the factors leading to the banking crisis in Ireland.