New advertising levy on TV channels urged to fund Irish content

BAI-commissioned report says UK ‘opt-out’ channels taking a huge chunk of ad revenue

The broadcasting regulator should place a levy on television channels that sell advertising in the Irish market, and then use the sums raised to fund Irish content, a report by consultants Mediatique has recommended.

The report commissioned by the Broadcasting Authority of Ireland (BAI) said a content-funding levy on so-called opt-out channels was "desirable", as long as the revenue was redirected by the BAI into the production of domestic content.

Dozens of mostly UK-based channels operate advertising "opt-outs" in this market, taking a substantial chunk of ad revenues, which Minister for Communications Denis Naughten has previously said poses a "serious impact" on the viability of Irish broadcasting.

Sky either owns or sells advertising on behalf of the majority of these channels, with the other main player being Channel 4.

However, Mediatique said a new content-funding levy would have to be applied to all Irish channels, including RTÉ, TV3 and TG4, "to be acceptable on competition and fairness grounds". Those broadcasters could then apply to the BAI to use the funds generated by the levy to make programmes.

The London-based consultants highlight “peculiarly acute” challenges in the Irish advertising market, suggesting that ad revenues for both radio and television will be “flat at best” over the next five years.

Broadcasting levy

The consultants also say that broadcasters that relocate to Ireland from the UK after Brexit should be charged an existing levy that is used to fund the costs of BAI’s operation.

Channels that are licensed under Section 71 of the Broadcasting Act are currently not liable to pay this broadcasting levy, which has created a perception of unfairness in the market in the past. But a proposed amendment to the legislation may change this ahead of Brexit and allow for a potential new revenue stream for the Irish sector.

The UK's exit from the European Union is expected to trigger a move by several international broadcasting groups from London, as the UK is the current home of more than 900 channel services that distribute to other EU countries, excluding the UK, using a licence from British regulator Ofcom.

Mediatique’s report on the Irish broadcasting market has been published alongside the launch of a new public consultation by the BAI on the future development of the sector. The regulator has said it is “open to exploring” the addition of new “niche” radio services.

It has also signalled plans to commission an independent expert review of the potential for digital radio in Ireland. It said it had not explored the development of digital radio platforms “in any great depth” because of the recession and ongoing pressure on advertising revenues.

Submissions of interest

The BAI received 10 submissions of interest last year for the provision of new radio services, with a further three submissions from radio groups seeking an expansion of their franchise area.

A further five submissions “urged caution” on the part of the BAI to licensing new radio services in light of the current difficulties in the marketplace, and also sought the abolition of the broadcasting levy.

Denis O’Brien’s Communicorp group – which owns national stations Today FM and Newstalk as well as 98FM, Spin 1038 and Spin South West – criticised the BAI last year for appearing keen on the idea of new services at a time when the radio sector was, it said, facing “unprecedented pressure on its commercial revenues”.