RTE may require £57m to fund digital channels

The digital TV channels planned by RTE will require almost £57 million (€72 million) by 2006, the State broadcaster has claimed.

In its submission for a licence fee increase to £120 from £70, the company said the news, youth and learning channels would have "limited" revenue potential due to a smaller reach and low audience share.

The document said such services would cost £3.87 million this year, £13.99 million in 2002 and £13.74 million in 2003.

Seen by The Irish Times, the confidential application to the Department of Arts, Heritage, Gaeltacht and the Islands said RTE would report an overall deficit in 2003 of at least £18.5 million without the increase.

In that case, the combined broadcast deficit on existing services from 2000 to 2003 would be about £71 million. Such "unsustainable deficits" would quickly evaporate RTE's reserves, the document said.

"This would impact on the long-term viability of the organisation and would lead to a reduction in the quality and content of output, ultimately undermining the ability to deliver credible public service broadcasting."

RTE's operating deficit in 1999 was £16.6 million. It expected to lose £12 million last year and has said "smaller" losses would continue this year.

The submission added: "The argument is not that RTE should be insulated from market change or the need to respond to it. It is that RTE has been increasingly hamstrung in coping with change by the relentless and sizeable erosion of its public funding base."

The submission forecast television advertising revenues of £88 million this year, the same as in 2000. It forecast radio earnings rising to £24 million this year from £20.5 million in 2000 and said sponsorship arrangements would generate £5 million this year, £1.5 more than in 2000.

Citing its television figures, the submission said: "Can RTE really obtain 69 per of (advertising) revenue with 38 per cent audience share?" RTE forecast TV3's revenues rising to £19 million this year from £14 million in 2000 and predicted UTV's earnings in the Republic would rise to £13 million this year from £12 million. Channel 4 advertising revenues would remain static this year at £3 million and Sky would earn £5 million.

The broadcaster wants any fee increase linked to the consumer price index - if accepted, this means the fee would rise every year.

The application is being considered by the Minister for Arts, Heritage, Gaeltacht and the Islands, Ms de Valera. She is also considering a report by consultants, PricewaterhouseCoopers, which has conducted an examination of the application.

RTE's last "real" licence fee increase was in 1986, the submission said. The £8 rise to £70 granted in 1996 was absorbed by RTE's requirement to provide programmes for TG4, formerly Teilifis na Gaeilge.