Laura Slattery: A handsome land sale, but no winning streak for RTÉ

Surprisingly nice price for almost nine acres at Donnybrook still won’t fix its finances

The winning land sale bid, way above the €75 million guide price, is the rare example of a nice surprise for RTÉ. File photograph: Cyril Byrne/The Irish Times

The winning land sale bid, way above the €75 million guide price, is the rare example of a nice surprise for RTÉ. File photograph: Cyril Byrne/The Irish Times

 

RTÉ has secured a price of €107.5 million for almost nine acres of prime land in Donnybrook, and by everybody’s estimation this is a fine sum. In the language of TV catchphrases, “good game, good game”.

But RTÉ’s director-general, Dee Forbes, is keen that the proceeds should not be regarded as a “windfall” or a “bonanza”. This would undermine its lobbying position in the run-up to a critical autumn period for RTÉ, which wants both higher and more secure levels of public funding.

It is also true that RTÉ has not spun the wheel and landed on a grand prize of €107.5 million. For starters, there are professional fees and a capital gains tax bill to pay.

In theory, there should still be more than enough cash to pay for decent capital investments (and a cuddly toy). But RTÉ will have to make the land sale money stretch far beyond the long-mooted improvements to its facilities and infrastructure.

Vague mention has been made of paying down debt. As of the end of 2015, the most up-to-date figure published, RTÉ had total borrowings of €50.6 million.

The bulk relates to a project finance loan facility agreed between transmission subsidiary 2rn and Barclays Bank, which RTÉ was obliged to take out to fund the launch of Digital Terrestrial Television (DTT). It was refinanced in 2014, when some €40 million was drawn down, and it matures in 2019.

In 2012, RTÉ also entered into a €15 million, five-year loan facility with Bank of Ireland, which it took out for “working capital”. It matures this summer.

The summer will also see the formal launch of a programme of voluntary redundancies and early retirements. The exact number to leave RTÉ won’t be known until the applications roll in, but it may be about 200-250, and it is now widely assumed at Montrose that a portion of the land sale money will be used to fund the redundancy packages offered. Naturally, the RTÉ group of unions will seek the best possible terms for members.

There is nothing wrong with this in itself. The whole point of voluntary redundancies is that staff are incentivised to leave. The well-established principle is that the organisation takes the upfront restructuring hit, but gets to reduce its payroll costs in the years ahead. RTÉ, however, does not have the best track record with the second part of this equation.

Although it made deep cuts to its workforce in the recession, the tally rose by 122 in 2014 and 2015, bringing its total as of the end of that year to 1,978. In March, a déjà vu-afflicted Matt Cooper observed to Forbes on Today FM that he had lost count of the number of times RTÉ had announced 200 redundancies, only to see its workforce climb back above 2,000.

The media industry is constantly in flux and an organisation like RTÉ will probably always need to hire new blood with new skills. This time, there is upfront talk of adding 80 people to do the hard labour on its “integrated content strategy”. But when headcount moves in and out like an accordion, there is inevitably a cost to that.

Rare example

The winning land sale bid, way above the €75 million guide price, is the rare example of a nice surprise for RTÉ. In the media industry, the sands shift fast, and Brexit is the spade that flattens all castles. The impact of a weak sterling has taken €5 million to €6 million off RTÉ’s commercial revenues in the 12 months since the UK referendum result. This means that currency movements alone have cancelled out the additional €6 million RTÉ was effectively awarded in the last budget.

This extra allocation was achieved by switching €5 million of TG4 funding away from the licence fee to the exchequer - a part-reversal of an earlier move - and through a €1 million increase in the cap on the Department of Social Protection payment for free television licences.

RTÉ would dearly like this cap to be lifted again (it was cut by €5 million in 2014), as this would increase its funding without the need for the Government to do anything as complicated as reduce licence fee evasion, or as politically unpalatable as increase the €160 rate.

But as far as claims on the public purse are concerned, there is a long queue and RTÉ is hopping about somewhere near the back. Its day-to-day finances are such that a 2016 deficit of more than €20 million will soon be confirmed. In these circumstances, it is hard to see how it can green-light every item on its own wish list of upgrades.

And from the Government’s perspective, and that of many taxpayers, the land sale is RTÉ’s Communion Day haul on top of its regular pocket money. Once it is used up, attention will turn to a possible Confirmation Day injection: the remaining acres at Montrose.