RTE to get first domestic competition in the autumn

If all goes to plan, TV3 will go on air in September offering RTE television its first domestic competition. CanWest holds a 45 per cent stake in the station while the original consortium - comprising Mr James Morris of Windmill Lane Pictures, show business accountant, Mr Ossie Kilkenny and U2 manager Mr Paul McGuinness - has a further 20 per cent. Thirty five per cent, available to third party investors, is being sold in the Irish market by AIB Capital Markets.

TV3's chairman Mr James Morris, says CanWest is supplying the start-up finance. Establishment costs will be quite small, between £15 million and £20 million. Transmission will be paid out of an annual rental to RTE, which will retain ownership of the transmission system.

CanWest, the world's largest non-US purchaser of Hollywood's television product, has also placed itself in a position of influence in Ulster Television where it recently increased its stake to 12.1 per cent. The Canadian company is expected to maximise cooperation between UTV and TV3.

Both the Government and the IRTC are desperate to see TV3 on air. TV3 is the IRTC's hope of a real success given the lack-lustre performance of Radio Ireland/Today FM.

Advertisers, meanwhile, are fed up with the inflation of RTE's advertising rates, amounting to a 20 per cent price hike last year over 1996. Over the past number of years, RTE's advertising income has risen by about £8 million annually.

TV3 will be allowed nine minutes of advertising an hour, compared to six minutes on RTE. The amount of new advertising will be significant and the industry is convinced this explosion of advertising time will have the effect of reducing RTE's charges.

Mr Morris says TV3's audience will come, to a large extent, from among those watching British television. RTE has a 45 per cent share of the audience in multichannel areas. Mr Morris maintains that TV3 will be competing with RTE for advertising revenue, but not necessarily for viewers.

TV3's reluctance to give out more information only eight months before going on air has forced those in the television and advertising industry to do their own sums.

A quick look at television financing would indicate the matter is not as simple as Mr Morris implies. UTV, for example, has a turnover of about £35 million, with the advantage of being part of the ITV network. Its national and international news comes from ITN. It buys programmes as part of the ITV club.

Where will TV3 find funding of this magnitude?

RTE has been a very successful operator in a highly-competitive market. It has 45 per cent of the audience despite competition from some of the best television in the world. Apart from the four British terrestrial channels, there are an increasing number of satellite and cable services. This is what TV3 is up against with minimum finance and little home-produced television.

Mr Morris says costs are now lower and new technology has made television cheaper. He also says that expectations, at least initially, are modest. Eighty per cent of all earnings are made during the three hours of prime time. "One hour is fine for us in the first year," he says.

RTE is already gearing itself up for more than competition from TV3 in terms of audience and advertising. It will also mean competition in buying programmes.

In theory there is no need for RTE and TV3 to compete. The reality is, however, different. A handful of major programmes such as Friends, ER, or Seinfeld, occupy the minds of the TV buyers. Anyone serious about schedules and audience wants those programmes and TV3, it must be assumed will be no different.

Logically, Mr Morris might be right when he says it is in neither RTE's or TV3's interest to "make distributors rich". However, no one can let the competition get a real audience winner without a fight.

While advertisers desperately want more advertising time, some are also fearful that TV3 may impoverish RTE. The national broadcaster is already under severe financial pressure. E's range of experience, resources and talent.

One view is that TV3 could compound RTE's financial crisis, while itself being unable to offer anything as substantial.

TV3 has said nothing about programming, other than that 15 per cent of output, including news, will be home produced, rising to 25 per cent. RTE has between 30 to 40 per cent home produced. TV3 has not made public its programming policy, but in parts seen by The Irish Times it talks of an emphasis on news and current affairs. James Morris says this is a commercial decision. Good news and current affairs attracts an audience. It also ensures that TV3 is seen as a national service.