Saturday 16 December 2017

RTE's Forbes can't afford to squander land windfall

New content strategy crucial as last chips cashed, writes Samantha McCaughren
RTE’s Dee Forbes Photo: David Conachy
RTE’s Dee Forbes Photo: David Conachy
Samantha McCaughren

Samantha McCaughren

RTE has toyed with selling a chunk of its very valuable Dublin 4 site many times but as money has become increasingly tight, the pressure to cash-in has intensified. The broadcaster is to sell over eight acres of its site for more than €75m and as it tries to reshape the operation for a digital age, there will be no shortage of options for this sizeable windfall.

During the last recession, then director general Noel Curran was faced with a catastrophic crash in ad revenue as TV ads fell 40pc. After cutting costs, RTE ended years of losses by breaking even and delivering a small surplus in 2014.

Unfortunately, that financial health has faded all too quickly. RTE, like other media, had expected that once the recession had passed it could count on a steady return to growth in advertising.

Unfortunately, it has not worked out quite like that. Shortly before Dee Forbes took over as director general of RTE, the Brexit vote shocked advertisers and their clients, who retreated from planned budgets.

Many of the big UK brands manage TV advertising centrally from London and there was a swell of caution among the big advertisers, who put off new campaigns and even delayed product launches. Also, the weakness in sterling automatically reduced their Irish ad spend.

Instead of returning to Ireland from her post at the Discovery group of channels to head up a challenged RTE in a recovering economy, Forbes was faced with even more headwinds. As first reported in this newspaper, RTE is expected to report losses of up to €20m for 2016 and 2017 will be another difficult year.

In addition to Brexit woes, it has become apparent that advertisers are increasingly favouring online alternatives which is a longer term concern. At the same time, the willingness of government to strengthen the RTE licence fee is absent and while communications minister Denis Naughten is doing his best to improve RTE's lot with a pledge to clamp down on licence fee evasion, no one is promising a much longed-for overhaul of the way in which public service broadcasters are funded.

It is extremely fortuitous, therefore, that RTE still has one very precious jewel to sell off - its land. The last cash bonanza came in 1999 when RTE sold Cablelink, which later became NTL and then Virgin Media. But it is unlikely that RTE has many more chips to cash in.

Last week, Forbes was quick to point out that the sale proceeds would not be used to fillip RTE's losses. In a message to staff she said: "Funds raised will not be used to shore up operational deficits. That would be reckless. Nor does this represent a 'bonanza' or a 'windfall' for RTE. Rather, we are playing catch-up in an industry and market that is evolving rapidly." The question now is can RTE really catch-up with a rapidly changing global industry? Netflix looms large on the horizon as do a plethora of other technological developments.

Even with over 200 job cuts, RTE will remain a massive organisation with over 1,600 full-time staff. Will it have the revenues to support this?

While much of the focus on last week's announcement has been on redundancies at RTE, the broadcaster will also hire 80 people for its new integrated content strategy. "It has been a long time since this much new blood came into RTE," said one RTE insider.

Difficult decisions are being made that will be crucial to RTE's future. For example, it has opted to keep radio within the new integrated group structure which will be overseen by head of content, Jim Jennings, currently managing director of radio. Some other media groups have decided against bringing radio in with TV and digital but RTE sources said last week that management is confident this will work. There is no tried and tested blueprint, however, and the finer details have yet to be revealed.

The plan to sell the land pre-dates Forbes and was agreed by the board over a year ago. However, how well it is spent will very much lie with her.

Sunday Indo Business

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business