RTE is expected to report a profit of about £1 million for 1996, The Irish Times learned. But losses on broadcasting operations rose. RTE lost about £7 million on its broadcasting activities in 1996 after a loss of £2.4 million in 1995. A sharp rise in the cost of bought in programmes, an increase in the number of broadcasting hours and the provision of programmes for Teilifis na Gaeilge drove up costs last year, pushing broadcasting activities further into deficit. The commitment to provide one hour's programming per day for Teilifis na Gaeilge cost about £3 million.

RTE Commercial Enterprises, a subsidiary set up to tap revenue from sources other than licence fees and advertising, is expected to show strong profit growth. Profits are understood to have risen to about £5 million from £3.7 million in 1995.

Riverdance made a big contribution to profits at RTE Commercial Enterprises: RTE has a 25 per cent stake in the company set up to run Riverdance. Other contributors included the RTE Guide, programme sales and merchandising.

Profits from RTE Commercial Enterprises offset some of the losses on broadcasting, reducing the loss on activities to £2 million. Interest and investment income of about £2 million and dividends of about £1 million from Radio Tara allowed RTE to record an overall surplus for the year of about £1 million.

RTE's 1996 surplus of about £1 million compares with a surplus of £14.85 million for 1995. But this was boosted by a once off £10.1 million from the sale of a 15 per cent stake in Cablelink.

In the current year RTE faces the challenge of new competitors - Radio Ireland and TV3. Already there is a proliferation of satellite and cable channels and the impending threat of digital television.

This increase will maintain upward pressure on the price of bought in programmes, about 50 per cent of RTE's output.

In addition, the commitment to provide one hour's programming per day for Teilifis na Gaeilge is expected to cost RTE about £5.6 million.