A number of members of the Cabinet have signalled their opposition to the controversial proposal from the Minister for Arts, Heritage, Gaeltacht and the Islands, Ms de Valera, to privatise RTE's transmission network.
The proposal was recommended by the Minister in a memorandum circulated to her Government colleagues for their observations last week.
The Irish Times has learnt the Taoiseach is among the Cabinet members who have expressed opposition to the sell-off of RTE's transmission system on the private market.
The indications from informed sources last night was the proposal would not proceed. A senior Government source said it "would not fly".
The Government agreed in July 1999 to make arrangements for the separation of the existing transmission system from RTE and the introduction of digital terrestrial television.
A new company, Digico, was to be established which would have managed the transmission system and the new network for digital television. RTE would have held a 40 per cent share in the company.
However, last week it emerged that a different position was being pursued by Ms de Valera, with the transmission system to be sold off to the highest bidder. RTE would also be excluded from having an involvement in the future ownership of the system.
A number of Ministers expressed surprise at the change in policy when the issue was raised at Tuesday's Cabinet meeting. Some were annoyed at Ms de Valera's "solo run" since the "new policy" came into the public domain before Ministers were circulated with the new recommendation.
A difference of opinion on the value of the network has emerged in recent months between RTE and AIB Capital Markets, which has been appointed by the Government to oversee the establishment of Digico.
The Minister told the Dail yesterday that "certain difficulties have arisen in the structuring of the transaction". She said she was consulting with Cabinet colleagues about the most appropriate way forward " following which I may bring the matter to Government for decision".
The new Government policy on the future of the transmission system will become clear when the amendments to the Broadcasting Bill are published. While the original plans for Digico are likely to be modified, the reaction of Ministers to the proposed privatisation of the network is expected to rule out such an option.
Ms de Valera said yesterday the proposals would "be informed by the concerns of the staff of RTE who are likely to be transferred to the new digital transmission entity".
The Minister will meet the RTE Authority today to discuss the issues surrounding the future of the transmission network. While there is opposition to the full sell-off of the system, RTE is understood to be arguing that it needs the injection of funds which would come from the disposal of part of its stake in the transmission network. The station is due to report a financial deficit of u£9 million for 1999 with an anticipated loss of u£12 million this year.
Labour TD Mr Michael D. Higgins, in the Dail yesterday, described any proposal for privatisation as "outrageous". He said the national broadcaster would have effectively "become a tenant on sufferance" in a system which it built.