Mr. Mathew Horsman:

This gives us a kind of indicative quantum but also, and crucially for us, the flow. The direction of the flow of funds in all the examples is from the channel groups to the platforms. That has been true, which is what drives the US market where $7 billion is spent for that. In every case where there has been disagreement or a dispute, it is routinely settled in favour of the free-to-air channel. People do not want a cable offering which does not include the most popular channels if they can easily, as it were, cross the street and get it from somewhere else. In a competitive market, that is a great restraint on the ability to simply get rid of services, place the whole system into blackout and live with it. That is not going to happen because the platforms will want to continue to have access to the channels.

One of the reasons we provided figures for 2014 and 2016 is that in carrying out a survey at any given time, one finds that while there are similar outcomes, it is a slightly different outcome each time. That is because it depends on how many people subscribe at the time of the analysis, what is happening to advertising, how much RTE is charging for it and what variables go into the model. It will always be a little different. What we propose here is a kind of methodology for starting to have a sensible discussion about what payment flows might be possible. It would really be down to the team to negotiate the outcome. It would not be down to the analysts and consultants. This gives one a sense of what might be at risk and at play.

People may be thinking in looking at the figures that €18 million is a lot for Virgin to pay to RTE for example. Let us skip right to page 11 as we are running out of time, albeit there is a great deal more in the presentations. We encourage members to ask any questions. They might be wondering what €18 million to even €30 million means in the context of the overall market. We did a very simple exercise at the top of page 11. We looked at the licence fee. This is what we are calling the licence fee for television as opposed to other services which are funded by the licence fee.

This is taking RTE's TV spend plus Sound & Vision and TG4 all grouped as being the TV licence fee. The committee will not recognise it from most of the published figures. We then set the advertising market, not counting sponsorship, at approximately €184 million in 2016. Sponsorship is approximately €12 million. Regarding subscription, nobody reports any of these numbers properly so nobody really knows. However, we have a pretty good sense of these things and we think it is approximately €560 million in 2016 and €30 million in other areas, such Netflix, Amazon and some of the new entrants to the Irish market. That is a short €1 billion. It is a big number next to the €18 million we discussed for the fees that might be paid by Virgin to RTE.

Keep in mind that there is also further detail below the line before going to the final page, which is that not only RTE but many other people charge for advertising in the Irish market. In addition to RTE and TV3, there are the opt-out channels. I am sure everyone has thought a great deal about those. That market was worth almost nothing a few years ago but it is now worth €40 million. Of that, we think approximately €25 million is paid to Sky for its channels. Those are channels that have opt-out Irish advertisements and no Irish content to speak of. We will return to that issue. They are taking money out of the market. Pit that against the context of talking about perhaps €18 million in the example we gave earlier. It gives a sense of the order of magnitude of this.

It is also worth asking about what would happen if payments were made. If the end game is the sustainability of the public service model in Ireland, and we have talked a great deal about the licence fee and other elements, what happens to this money? Does it sustain the market for public service outcomes? One proxy for public service outcomes in our book is how much origination is being funded in a local market, particularly one which is a smaller nation that has a linguistically porous border with a big market that is able to export channels such as E4 and others that have come into the market with no commitment to content expenditure.

We basically added it up. Again, these matters are not properly written up anywhere so we had to make some assumptions, and we will be happy to have a discussion with Sky, let alone the committee, on these issues. We know the expenditure of Sky on content for the UK and Ireland. It is a big number - £3.3 billion was spent by Sky last year on content. Of that, £2 billion is for sport. There are other categories such as movies, acquired content and so forth. We then did a pro rataanalysis of that to the size of the Irish market, which is shown in that column. We then took Sky at its word, because it suggested that it spends £20 million in the Irish market on original content. It is not a number that we recognise, and it is fair to say that many people in the industry do not recognise it, but let us say that it is the right number. That would mean that out of every euro Sky generates in revenue, 5 cent is spent on original content in Ireland. The equivalent number for Virgin would be 20 cent on the euro and if that extra euro went into the RTE ledger it would be 83 cent. In other words, 83% of the attributable revenues RTE generates is spent on original content. It is likely, if one looks at the historical perspective if nothing else, that something that gives the possibility of having funds flow to RTE will have better outcomes than if the money stays with the platforms that do not invest appreciably in local content.

There is a great deal of detail in the back of the pack showing how the model works, and we provide many observations on the UK market. I believe what has happened there is of interest to the committee with regard to decisions on retransmission, prominence in navigation and priority issues around channels and listings. I will be happy to have a conversation on that, but I will conclude the formal element of the presentation now.