RTÉ plots recovery from big Brexit hit and flight to digital

Commercial boss Geraldine O’Leary ‘running fast’ to help broadcaster recover after €6.7m hit to income in 2017

 

“Am I optimistic?” Geraldine O’Leary, group head of commercial for RTÉ, repeats the question back. “Yes, I am. I am, because I recognise that the only way we can grow is by running fast.”

“Running fast” is now, more than ever, the trick that Irish media organisations must master. At the dual-funded but deficit-laden RTÉ, the commercial sands ran in the wrong direction last year, with commercial income falling €6.7 million to €151.5 million.

“The Brexit factor hit us hugely last year,” says O’Leary, who took responsibility for all of RTÉ’s commercial functions in January after former group commercial director Willie O’Reilly left Montrose.

The immediate problem was the collapse of the sterling, which meant UK-based advertisers’ budgets were worth less to RTÉ in euro terms. The ongoing uncertainty, “right up there” on any media company’s list of enemies, meant RTÉ’s television spot revenue, more than half of its commercial income, performed behind target.

“When people don’t know what’s going on, they tend to hold their budgets, because they are just afraid to spend. There was an element of that, people saying ‘oh s***, what’s going on?’”

O’Leary, who was previously commercial director of RTÉ Television, is hoping that 2018 will see a return to growth. At the six-month stage, RTÉ is trading up year-on-year “across the lot”, meaning across television, radio, digital and the RTÉ Guide.

This welcome half-year status is the result of an amalgamation of RTÉ’s once separate sales teams into one “more sensible”, multimedia RTÉ Media Sales unit that is better able to serve clients’ needs, she says. Earlier this month, the united team began moving into new office space in an area of RTÉ’s Stage 7 building once occupied by the young people’s programming department.

“It is something I firmly believe in. Why not sell all of our assets together rather than effectively competing against each other internally?” she says.

Sponsorship saviour

“Non-spot”, meaning everything outside the ad breaks, is the current saviour, with sponsorship revenue up “double digits” in the year to date. “A level of inflation” in the sponsorship prices for the bigger properties has helped, but so, too, has finding sponsors for programmes like Home and Away and EastEnders that haven’t always had one.

On radio, too, sponsorship has been on the up.

“For the first time on RTÉ 2FM, the schedule is being sponsored from 7am to 8pm, and we’re absolutely delighted,” says O’Leary. The last one to fall into place was Transport for Ireland’s move to link the Leap card with 2FM’s drivetime Eoghan McDermott show.

“Our radio story is a good one,” O’Leary says. Radio revenues overall may have declined in 2017, but she believes that RTÉ outperformed the market on spot ads, while Radio 1’s performance allowed for some price increases, “which nobody loved”, though she says they understood the rationale.

Although 2FM will never be the commercial contributor it was when the late Gerry Ryan was the main driver of its audience and revenue, it has “slowly and quietly” adjusted for the listeners of 2018, she says.

“I genuinely believe 2FM is a little jewel in our crown.”

She is full of praise for her colleague Dan Healy, the 2FM boss who has been “doing very clever things” with the station, and not just on the schedule, but around the schedule.

We are speaking ahead of the latest 2FM Live-branded gigs by DJ and 2FM mid-morning presenter Jenny Greene and the RTÉ Concert Orchestra in Dublin’s Donnybrook Stadium, and Cork’s Live at the Marquee. The now regular collaboration, which began at Electric Picnic in 2016, is bringing in a new revenue stream to RTÉ, as well as promoting what 2FM and the Concert Orchestra can do to an audience that might not otherwise find them.

“If only we could come up with those ideas every week,” O’Leary says.

Industry habits

The march of Spotify and its streaming ilk upon music radio’s territory can be overstated, she believes, which may be because the habits of media industry people are not replicated beyond it.

“We are the worst industry for thinking everybody is like us. We think that our media habits are reflected by the general public and that is not the case. I don’t know how many studies people have to do to prove that,” she says.

“Things like Spotify and Netflix are here to stay, they have been very successful in answering a need. But the magnitude of them is exaggerated by people in the media industry, that’s what I would say. Is Spotify a threat today to spot revenue on RTÉ? It would be down the list of big threats at the moment.”

The migration of advertisers to the so-called digital duopoly of Google and Facebook is one reason, nevertheless, why there is pressure on broadcasters to create new and more diverse revenue streams.

Some traditional TV advertisers have in recent years grown less enthusiastic about the medium that made them, shifting greater chunks of their budgets to digital. And digital, in this case, does not mean RTÉ digital advertising (which actually fell 12 per cent in 2017), but Google and Facebook.

O’Leary says that after their period of experimentation, those advertisers are coming back.

“FMCG (fast-moving consumer goods) clients were told years ago they had to spend 20 per cent of their budget on digital. That instruction came from headquarters, and only the brave person on the ground would say to us that they weren’t sure why they were doing it, that it didn’t make sense for their brand.”

But advertisers’ own models for measuring campaign effectiveness are directing them “back to basics”, she says. “We have had some very reassuring conversations.”

In the meantime, the shape of the business has changed. When O’Leary first joined RTÉ from the advertising agency world “a hundred years ago” (1997), as much as two-thirds of television revenues came from consumer goods giants aiming their campaigns squarely at the main household grocery shoppers.

Now there’s a broader array of sectors, including hot categories like motors and finance, advertising on RTÉ and more still to lure. Sometimes it comes down to price: there’s a premium for advertising on RTÉ, which by law is allowed fewer ad minutes per hour than commercial rivals like TV3.

It has tried to turn this into a virtue, telling clients their campaigns will stand out better amid less “clutter”.

“A big part of what we need to do when we meet clients is reassure them about their investment,” she says. “We need to prove to clients that it’s worth advertising on RTÉ.”

World Cup blessing

Right now, it helps that it is an even-numbered year. “We have the World Cup, bless it,” says O’Leary, although she estimates the revenue it brings in would be about a third higher if Ireland were in it and, also, if it was being staged somewhere closer to home, boosting travel. “There’s nobody casually dropping over to a game in Russia.”

That doesn’t bode well for the Qatar 2022 winter World Cup, assuming it takes place, does it?

“No. No, it doesn’t.”

Does the advertising revenue RTÉ brings in from any World Cup pay for the cost of the rights?

“I honestly don’t know the cost of the rights, because very few people know the cost of the rights, and that’s the way it should be,” she says. “In general, though, sport never washes its face. Between rights and production costs, the money we bring in doesn’t pay for it.”

But RTÉ buys the rights, or tries to (Virgin Media’s TV3 has been more active of late), because it’s good for the RTÉ brand overall?

“Yes. We’re the national public service broadcaster and sport is a massive part of what we do, and of being Irish. It’s getting more competitive. Look at what’s going on around us. Losing the Six Nations was a complete sucker punch. Again, the world is changing, but sport is still what we do and what we will continue to want to do.”

‘Different DNA’

Is there anything, perhaps something that’s classed firmly as “public service” within RTÉ, that she considers an untapped commercial opportunity?

“Taking a step back, I don’t see it as public service versus commercial. I genuinely don’t see it as separate and I have been here a long time,” she says.

“We have a different DNA and I’m very proud of our DNA. There are things that we don’t do that others do that are absolutely commercial, and that’s fine. The thickest line here is the line between editorial and commercial.”

This year’s controversial review of RTÉ’s orchestras expressed the desirability for higher commercial revenues from the orchestras, even if this was not, in itself, a solution to funding them.

“Could the National Symphony Orchestra have a sponsor? If it was the right one, the appropriate one? My view, and it wouldn’t necessarily be my call, would be yes,” she says. Indeed, before the financial crash, the RTÉ National Symphony Orchestra was sponsored by Anglo Irish Bank.

But there aren’t really any flashpoints between commercial and editorial, she stresses. Everyone wants to maximise RTÉ’s audience. “We’re trying to reach all of the people some of the time. Not everybody all of the time, that’s not possible. It’s about driving a mixed schedule that has parts that appeal to everybody. That’s public service, but it’s also commercial. I don’t see the difference.”