RTÉ funding model a ticking timebomb as licence fee take keeps falling and Tubridy controversy far from over

Kevin Bakhurst’s note to staff on Wednesday afternoon opened with cheery banalities typical of a company-wide email, praising “our own RTÉ Concert Orchestra”, which “undeterred by the rain… wowed the crowds” at the All Together Now festival. He then went on to describe how the broadcaster was throwing itself into Fleadh Cheoil na hÉireann, (“As the RTÉ ad says, Are You Coming to the Fleadh?”)

However, RTÉ's new director general could not skirt the more fundamental issues facing the station for more than a few paragraphs. The note diverted sharply into an extensive rundown of corporate governance overhauls − aiming to “ensure recent failures are not repeated”, staff surveys, an update on some of the half dozen external reports into the recent pay controversy, and plans to introduce a register of interests for workers at the company.

While the fever over the undisclosed payments to Ryan Tubridy has temporarily eased over the summer, a steady drumbeat has shown, week by week, how the numbers paying TV licence subscriptions have fallen away. The first week of August saw 5,000 fewer paying, equating to about €900,000 in lost revenue − the majority of which would be destined for RTÉ. That followed a €2.7 million decline last month.

The Department of Arts and Media says the figures are “point-in-time comparisons and not necessarily a useful indicator of future trends”. However, it concedes that the recent decline in TV licence fee sales figures likely reflects “public sentiment following the revelations about certain payments by RTÉ”.

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[ RTÉ appoints legal firm to investigate two voluntary exit schemes that ran in recent years ]

[ Discussions on RTÉ's future funding to begin in September ahead of Budget 2024 ]

The trend has changed the picture, Government sources say. “The new lack of compliance has thrown a whole new dynamic into the discussion,” said one Coalition source, who will be involved in talks about the broadcaster’s finances.

The licence fee issue gets to the heart of a wider question: whether the controversy has shifted the financial centre of gravity at the broadcaster, perhaps permanently.

How serious is the threat to RTÉ's future from dwindling licence fee revenue? And how does it play into the wider political drama around the broadcaster’s future and finances?

Plummeting fee

Despite the sharp decline in licence fee income, Bakhurst told The Irish Times on Friday that it was not an immediate threat to the broadcaster. “We’re not going to run out of cash this year or next year. We have reserves,” he said.

The drop will not force RTÉ's hand on any immediate programme of cost cutting − but that does not mean it can be fully discounted, Bakhurst added.

“What it might affect is investment decisions in digital and in transforming the organisation − they have a price tag,” he said. “I still want to press on with what we can press on with, but some of them may have to be delayed until we have a little bit more certainty about funding, and I think that’s the sensible thing to do.”

Prior to the controversies, it is understood that licence sales were either up or broadly stable in each month of this year.

Decline is not a new issue − between 2018 and last year, total annual licence sales fell by 100,000 individual units, driven by migration to no-TV homes, an increase in free licences, evasion and enforcement issues. However, the latest drop is regarded as a significant development, with a source describing it as an “intense acceleration of a trend that was already showing undeniable signs of inevitability”.

In the short term, the dip in fee income will play into a budget bailout for the broadcaster, which is expected to at least match the funding given last year outside the licence fee process of €15 million. The Government believes another funding request from RTÉ is unavoidable.

“There will be an ask and there will be a bigger ask than last year, that will be the expectation,” said a Coalition source.

Bakhurst, however, says a financial “range” had already been given to the Government, prior to him taking up his position. This is said to be in the region of €35 million. That “range” has been supplemented in recent weeks with more information about the fall in licence fee income, but Bakhurst does not intend to give a new number to the Government.

[ RTÉ suffers almost €1m drop in licence fee income in a week ]

[ Decision on Ryan Tubridy’s future with RTÉ unlikely until later in August ]

Sources with knowledge of RTÉ's finances privately believe a bailout roughly equivalent to last year’s will be needed. “They’re going to have to throw another €15-€20 million at this,” said one. Commercial revenues have, to the broadcaster’s relief, remained stable since the controversy.

Privately and publicly, the Government is adamant that RTÉ must show progress on reform before a short-term cash injection is agreed. “Doing nothing is not an option,” says one Coalition source involved in the decision-making, citing public commitments made by Bakhurst on a register of staff interests, as well as examining high levels of pay and wider pay transparency and deals for cars.

The broadcaster on Friday confirmed it was appointing McCann Fitzgerald to investigate the operation of two voluntary parting schemes.

Deep freeze

In truth, the discussion about short-term funding is a tangent to the long, tortured war between the Government and RTÉ over the broadcaster’s future funding model.

Talks on longer-term reforms of the licence fee system − sought by RTÉ for years − have effectively been put into deep freeze while the station is decontaminated by a series of external and internal reviews.

While Government sources say work was well-advanced, and that high-level talks within Government on the future funding model will continue, Bakhurst said there are no substantive talks under way. He accepted that it would not be appropriate to have them for a period of several months, adding that it would be “premature” to ask for a meeting before then. Nonetheless, he was adamant that the issue of RTÉ's finances and structural reforms to the licence fee model could not be put on the long finger forever − and that this was beginning to become entwined with the dip in paying viewers.

“Clearly, in the long run, [the licence fee income decline is] a threat and it just underlines what’s generally accepted which is that the public funding system does need to be reformed and again underlines the urgency to do that,” he said.

Some on the broadcaster’s side are frustrated, seeing the current controversy as merely providing extra cover for a long-standing government policy of slow-walking the decision on fundamental reform. “This has given an opportunity for people not to be dealing with it,” said one source.

Doubtlessly, the Government would reject this − one source pointed out that a lot of work had been done prior to the Ryan Tubridy pay controversy erupting. Political insiders are ambiguous about the extent to which something can be agreed or to which discussions can proceed while the various investigations are ongoing. Officially, a Department of Media spokesman said that “a decision on this must be paused for the moment”.

The Taoiseach, meanwhile, spoke about how funding would be conditional on reforms. Gauging precisely what that means and how much reform is enough to enable funding to flow and discussions to begin meaningfully on the future is likely more of an art than a science that Bakhurst will have to perfect, while also examining options such as selling off Montrose or other assets as part of a wider shake-up.

[ Ryan Tubridy’s decision not to seek €120,000 bonus he was entitled to ended up adding to his troubles ]

[ Sinéad O’Connor by Ryan Tubridy: ‘She was rock’n’roll. I was the opposite’ ]

But he was clear that while such steps may prove important, they are part of a future strategy that “has to be holistic, and number one in that is we need some degree of certainty around public funding” in addition to how the organisation can reshape itself.

“One thing’s for sure,” he said, “we can’t just carry on doing nothing.” Unless something is done to change the remit or fix public funding, then it is “not sustainable in the long run”.

‘Enormous’ salary

Overhanging all this is the question of Tubridy’s future. Despite the (in his own words “enormous”) salary, it will not affect RTÉ's finances. But in terms of public and political confidence in the broadcaster, it is the most delicate issue facing Bakhurst. He had hoped to draw a line under it last month, but he indicated on Friday that initial talks were not conclusive.

“I had an initial discussion with him. We both went away, wanted time to think about it and I felt that we needed further discussions rather than jumping to conclusions. But there is an urgency around reaching a resolution now,” he said, adding that he expects that to come in the next week or two.

Tubridy, Bakhurst said, is being paid a wage currently − but it is lower than what was originally sought in an invoice put in as the controversy raged. “We didn’t reach agreement, so we’re paying him what we think is reasonable on an interim basis,” Bakhurst said.

“It’s ongoing discussions so I don’t really want to get into that right now, but it’s wider than just salary,” he said.

Asked if Tubridy was seeking more money than RTÉ was willing to give, Bakhurst said: “Well, this is always the case in negotiations, alright. We’re not offering him more than he wants,” adding that, at the moment, “it’s quite delicate timing and there are a number of things to resolve so we hope to resolve them in the next week or two”.

As summer winds to an end, the signs are that the RTÉ controversy will return to the boil once again.