RTÉ poised for cuts as it pleads with Government to fix ‘broken’ licence fee

After warning that it could need to make compulsory redundancies if it didn't receive a boost in its public funding, RTÉ management has spent the past 10 days digesting the fact it received nothing in Paschal Donohoe's Brexit budget.

No contribution by way of the sum allocated to cover the cost of free television licences, no other exchequer support and – unsurprisingly – not a cent on the rate of the licence fee, which has been static since 2008.

The one budget measure that could, over the long term, take a weight off RTÉ's deficit-laden books is the €1 million officially set aside to "allow for the start of the process" of transferring the National Symphony Orchestra away from RTÉ to the National Concert Hall.

This will eventually remove a chunk of the €15.6 million it costs to run its orchestras division (some €9.16 out of every €160 licence fee). But within RTÉ this is regarded as a contribution already promised, rather than anything new to alleviate its current financial predicament.

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After recording seven annual deficits in the past 10 years, RTÉ is predicting significant further funding shortfalls as it struggles to maintain its output.

But the Government message has been sent: RTÉ must get the scissors out and make cuts. But which ones? Everything is under review, the broadcaster’s director-general, Dee Forbes, said last month. This hasn’t stopped speculation that some of its services, programmes and even individual presenters are under closer review than others.

RTÉ's 1,800 employees, and the broadcaster itself, are now in a delicate post-budget limbo. It is understood that the organisation has drawn up a set of proposals for how it might function in future, or what Minister for Communications Richard Bruton calls the "optimum strategy to allow it to meet its strategic and financial challenges".

Aspects of the plan are being "validated" by accountancy firm PwC, while the Broadcasting Authority of Ireland has been consulted. State company advisory body NewERA is also evaluating the plan "at the department's request", the Minister told the Dáil on Wednesday.

RTÉ says it is “acutely aware of its responsibilities to secure the future of public media” in Ireland.

“Audience habits and needs are changing and so is RTÉ. RTÉ is actively engaging with Government on its future and will brief RTÉ staff on our plans in the coming weeks,” it said this week.

Not a ‘bailout’

“While RTÉ is also very aware of the financial challenges posed by Brexit, RTÉ has been making the case for licence fee reform repeatedly for many years. RTÉ is not looking for a ‘bailout’, RTÉ is urgently seeking action on a licence fee system which is broken and not reflective of how many people consume media today,” it added.

The broadcaster is also aggrieved that the summer announcement of a public tender for licence fee collection, currently performed by An Post, will in effect push "meaningful system reform" out by six years or more. This is "compounding this crisis, and not just for RTÉ".

Burned by previous experiences in which it was forced to row back on (arguably logical) cost-cutting plans after political uproar, the public service broadcaster is keen to secure the firm backing of the Government for its restructuring proposals before they are formally announced.

Otherwise it could be set for a fresh cycle of announcement, outrage, reversal and stasis.

The mooted demise of Lyric FM is just the latest case in point. Since being suggested as a possibility on an RTÉ Prime Time report last month, the potential closure of Lyric FM (gross cost €6.6 million, or €4.31 of each licence fee) has been raised in the Oireachtas by five Senators (including three from Fine Gael) and five TDs (including Minister of State Seán Canney, who said the Government should intervene to prevent its axing).

Fianna Fáil communications spokesman Timmy Dooley is among those who say shutting the 20-year-old station, "relatively cheap in overall terms", is not the answer. The dismantling of RTÉ's arts and culture services would be an "appalling vista", he believes.

Dooley has come to the conclusion, which he has also expressed in the Dáil, that RTÉ will “have to look at compulsory redundancy”.

At its Montrose campus in Dublin, there are staff performing tasks that are either no longer required in the digital media age or soon won’t be, he argues: RTÉ can’t “bury its head in the sand and look for the taxpayer to solve the problem”.

“It has a huge body of work to do,” Dooley adds. “The [director-general] has to be bold in coming forward with a plan. I also think that the unions are going to have to step up to the plate. Work practices are going to have to change.”

This is “a battle that I’m sure won’t be fought easily”, he concedes. But Dooley is also critical of Government inaction on both RTÉ and broader media reform.

Fianna Fáil’s view on the broadcaster – that it must reform itself but that it also needs more support – comes from its analysis of a media industry that has been stricken by the wholesale decamping of advertising revenues and eyeballs to digital platforms. “When I started talking about this four or five years ago, people glazed over and thought I had taken something,” says Dooley.

By long-fingering moves to tackle licence fee evasion, the Government “bottled it”, he says now. He’s also surprised there was zero provision for RTÉ in Budget 2020 ahead of the expected restructuring plan. “I thought that there would have been some signal.”

Compulsory redundancies are a rare and difficult manoeuvre for any unionised semi-State – they are last resort territory – and no Minister will be keen to put their name to them. But there is a reason that they are being mentioned.

Over the past decade RTÉ’s bids to reduce its cost base by cutting the size of its workforce through a string of voluntary exit schemes has had limited success.

RTÉ’s personnel-related operating costs last year, at €183.4 million, are only €3 million lower than where they stood in 2010 – the year before it launched a voluntary scheme that saw 350 people leave the organisation.

Personnel costs

A later Forbes-led initiative resulted in a further 160 people exiting RTÉ in a voluntary programme between 2017 and 2018. This scheme failed to reduce RTÉ’s personnel costs last year, as the drop in staff numbers was offset by the full-year impact of the phased restoration of pay cuts that had been imposed during the recession.

The quantity of departures was also short of the original target of 200-300, while the plan was felt, both internally and externally, to have failed to address the perception that RTÉ is top-heavy in managers.

“Star” salaries are a frequent lightning rod for critics of how the broadcaster spends its money and almost certainly won’t escape the current review. In 2016, the most recent year for which figures have been published, RTÉ’s bill for its 10 highest-paid presenters was €3 million.

The contracts of three of the five highest paid – Ray D'Arcy, Joe Duffy and Marian Finucane – are understood to be on the cusp of renewal. D'Arcy, who returned to RTÉ in 2015, a year when the broadcaster took the foot off the pedal in its cost-cutting, recently told the Sunday World he had "no problem" with accepting a cut in his €450,000 salary – an outcome that may go hand in hand with a shorter episode run for his television chat show.

For Screen Producers Ireland, the organisation that represents the independent production companies that do business with RTÉ, attacks on presenter pay are a peripheral issue and a perennial distraction from the core plight. "Can we just stay away from that for a while? It's only a drop in the ocean," says Elaine Geraghty, SPI chief executive.

The budget was "unusual" in its inattention to public service media, she notes. At one press conference Bruton mentioned an additional sum of €1 million for TG4, but SPI has yet to ascertain if this will make a material impact to its ability to commission programmes. "The silence speaks volumes," she says.

Geraghty presumes RTÉ is “sharpening the pencil again in terms of the cost base”, a process that bodes ill in the short term for any uplift in its spending on independent commissions, which for years now has been hovering just slightly above the statutory minimum it is obliged to spend.

RTÉ’s perilous finances find their way on to the agenda of every SPI meeting, says Geraghty. Audio-visual production companies have concluded that the Government, in setting an ideological face against the broadcaster, either doesn’t recognise or doesn’t care about the collateral damage that its inertia on funding reform is having on the broader sector.

“It’s unfair on everybody. Being in limbo is not a good place to be,” she says. “I don’t think it could be screamed any louder by RTÉ about the precarious position they are in right now.”

The Independent Broadcasters of Ireland, which represents the radio sector beyond RTÉ, is in effect a rival to Montrose. It hasn't exactly been gunning for the closure of the enemy-less Lyric FM all this time. IBI chairman John Purcell, who is also chief executive of the Carlow-Kilkenny station KCLR 96FM, has "no objections at all" to Lyric. He was, however, a little taken aback by its associated costs and staffing levels.

Online shopping

“RTÉ is in a difficult position, but people in our sector wouldn’t have a lot of sympathy, because we’re in the business where you have to cut your cloth to suit your measure,” he says.

Something will have to give, he adds. A media organisation can’t ignore the radical shift in the media market – that would be akin to a retailer fervently wishing that online shopping would just go away. “It’s not as if change is going to stop.”

Indeed, RTÉ has made this same point, repeatedly, in its lobbying for the licence fee to be redefined as a broadcasting charge.

The big event on screen this weekend is Ireland v New Zealand in the quarter final of the Rugby World Cup in Japan. To date the RTÉ Player has attracted 830,000 live streams for the tournament, the rights to which RTÉ paid for through a sub-licensing deal with Eir Sport.

People who stream this online coverage don’t have to pay for a television licence if they don’t have a TV set, it notes. And by its estimate, this “no TV, no licence” phenomenon, when combined with a high evasion rate among those who should be paying, results in some €50 million in lost revenues to the sector.

“It is no longer possible to continue as we are,” Forbes told RTÉ staff in September.

That, it seems, is the one thing RTÉ, the Government and the viewing population can agree on.