RTÉ faces ‘existential’ financial crisis, Government told

Financial problems could require broadcaster to restructure radically, consultants say

RTÉ reported a net deficit of €7.2 million in 2019.

RTÉ reported a net deficit of €7.2 million in 2019.

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RTÉ is facing an “existential” crisis and acute financial problems which could require radical restructuring, according to a new report which has been submitted to Government.

The report was written by consultants Mediatique, who were asked by the Broadcasting Authority of Ireland (BAI) to analyse the performance of the public-service broadcasters RTÉ and TG4.

According to the authors, RTÉ will be “ left in the medium term with very limited room for manoeuvre if it is not allocated a significant increase in public funding” and while it can “continue with salary caps, attempts to reduce headcount via voluntary redundancy plans and further reform of its content mix”, a more radical restructuring would need Government guidance.

“Short of increased borrowing or seeking permission to use the proceeds from the land sale to cover current account deficits . . . RTÉ will need to be rescued,” the report warns.

“The implications for sustainability are acute. TG4, with its direct-funding model, is better protected, but it will not be able to expand its support for the Irish language and to continue to promote regional economic development without multi-year funding certainty.

“For RTÉ, the crisis is existential. If Ireland is to continue to have an indigenous public-service broadcasting ecology, with a sustainable commitment to news, Irish original content and genre diversity for multiple audiences, funding will have to be secured via a long-term reform of the licence fee and a short-term lifeline in the interim.”

It also raised the prospect of further job losses.

“It should be noted that RTÉ will still need to cut its costs further, given the likelihood of slow recovery in commercial revenues over the next 2-3 years. Compulsory redundancies, and potentially the closure of services (as has already been proposed), would have to be contemplated.”

The report and a cover letter from the BAI have recently been laid before the Houses of the Oireachtas.

Underdelivery

The consultants also warned that any significant change to the scale and scope of RTÉ could risk “underdelivery of impartial news, current affairs and original Irish content that would otherwise not be delivered by fully commercial providers”.

It concluded that underfunding at RTÉ has led to a situation where it is “difficult to see how the organisation could remain sustainable on the current public funding level without either a significant reversal of commercial fortunes or changes to its public-service mandate”.

“This is the case even with the significant cost-cutting envisaged in the revised strategy and the increase announced in late 2019 for the 2020 period of €9.3 million.”

In relation to Covid-19, the report found that the pandemic accelerated the transition to digital content, including among older demographics, and has precipitated a “rapid deterioration” in both licence-fee income and commercial advertising revenues.

Examining the situation at TG4, the consultants found that the station has been able to “live within its means” with the public funding it receives each year although the funding is “not adequate”.

“However, this is before considering the implications of Covid-19: TG4 will likely incur a significant operating deficit in 2020, which will need to be addressed.”

Following last year’s budget, TG4 received its biggest funding boost since 2008 with an additional €3.5 million bringing the broadcaster’s allowance to €40.7 million.

RTÉ reported a net deficit of €7.2 million in 2019.

The Mediatique report recommended additional funding for the broadcaster of €10.5 million. It also found that the cumulative funding gap against recommended funding by the BAI for the 2018-2022 period had reached €46.8 million by the end of 2019.

The report also references the planned work of the Future of Media Commission, which was established by the Government last year. Taoiseach Micheál Martin has said the television licence fee is not sufficient, nor is the way of collecting it.