Business Irish

Tuesday 18 June 2019

Desperation mounts in Montrose as cash appeals fall on deaf ears

RTE director general Dee Forbes
RTE director general Dee Forbes
Samantha McCaughren

Samantha McCaughren

What a couple of weeks it has been for former Communications Minister Denis Naughten, and what a couple of weeks it has been for RTE, whose fate has lain with Naughten since he took over the brief. Two weeks ago the Broadcasting Authority of Ireland took the unprecedented step of stressing the urgency of RTE's funding crisis, calling for an extra €30m a year for the broadcaster. For a po-faced regulator that usually goes out of its way to distance itself from politics, it was extraordinary to see it make an impassioned plea on behalf of the public service broadcaster.

It was a window to the increasing desperation being felt out in Montrose.

Last February director general Dee Forbes warned the organisation could not continue as it has. "We have had deficits for a number of years and that's not sustainable," she told this newspaper. RTE insiders were sure that a decision on funding would be made before the summer.

But with only a couple of months left in the year, RTE is still grappling with mounting losses and no hint of a decision on its calls for more money.

There is little sympathy at a political level, which sometimes is blamed on the adversarial relationship between elected representatives and the Fourth Estate. But looking at RTE's financials, it is easy to see why its calls for more top-ups are falling on deaf or certainly unsympathetic ears.

Take the last three years. In 2016, commercial revenue was €158.2m and licence fee revenue was €179.1m, totalling €337.3m. The loss for the year was €19.7m. In 2017, commercial revenue fell again to €151.m and a hike in the licence fee brought revenue there to €186.1m. Overall revenue was €337.6m. Leaving aside its land sale windfall, RTE maintained its turnover in a world of falling ad revenue.

However, losses continued to mount. RTE reported a net loss of €6.4m but in fact benefited from a one-off €5m payment from the sale of slots on Sky's electronic platform guide (EPG). It was not counted as an exceptional but, in essence, RTE losses were €11.4m.

For this current year, we can expect commercial revenue to shrink again and a loss in the double digits. Over three years, RTE will rake in the massive sum of almost €1bn - yet will rack up losses of over €40m.

And while RTE is looking urgently for more cash, it has in fact been getting money in recent Budgets. Last week it got a €8.6m boost. The previous Budget gave RTE €1.5m and in Budget 2017 RTE got €6m. So, as of next year, RTE will be €16m better off than it was in 2016. To be fair, RTE was down €26m as a result of emergency measures in earlier Budgets, but it is steadily clawing that money back. Yet losses are continuing to mount with no end in sight.

RTE continually trots out the line that external reviews have found the organisation to be efficient. But it is important to note the NewERA, part of the NTMA, issued a report in 2014 which outlined some radical steps which could be taken if its financial crisis continued. One recommendation caused alarm in Montrose at the time. It recommended "identification and assessment of the potential cost savings and associated cost implications of reducing/eliminating services in conjunction with relevant stakeholders". Out in RTE, bosses were privately concerned that 2fm and RTE Two, with their commercial slant, could be in the firing line, but attention quickly turned to another recommendation - that a chunk of land be sold.

So has the time come to make deeper cuts in RTE? The problem for Forbes to date is that every attempt to trim services has met with outcry and politically there has been no appetite to back them.

For example RTE tried to shed Aertel, its teletext service which has surely been overtaken by the internet. However, there was considerable outcry at the notion it would disappear. Getting rid of longwave radio has also been a battle. Outsourcing children's programming proved controversial. Paring back on orchestras became a big story earlier in the year.

But these are peripheral services. RTE may have to look at far more unpalatable cuts if funding is not forthcoming - and there is little reason to be optimistic. Cutting services will not be popular and the public backlash will inevitably fall back into the laps of politicians. A decision will have to be made - if RTE is going to have to make hard decisions, will those same politicians who have dithered over funding stand firmly behind RTE as it makes hard decisions?

Glanbia took a gamble on an outdated slimming product last week. The Irish company has been at forefront of the protein-based diet revolution, but bulking up SlimFast's popularity won't be easy. Advertising giant Ogilvy recently gave it a new tagline - 'Find your slim'. Ad industry bible Ad Age artfully highlighted the problem facing the meal replacement product. "It's no doubt swell for losing a quick 10 pounds to go from a size 12 to a size 10 in time for your cousin's wedding. It is not the path to a healthful diet. Yo, yo: It's the path to yo-yo dieting." Glanbia obviously thinks it has the ingredients to make the product work.

Meanwhile, it was intriguing to see CRH's announcement that Siobhan Talbot, chief executive of Glanbia, is joining the board. CRH is one of the most demanding boards in the country and the role will be time-consuming. It is typically the type of role an executive would edge towards as retirement beckons. Talbot is a sprightly 54, but has been at the helm of Glanbia for five years. Perhaps she is beginning to think of life after Glanbia?

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