Monday 25 June 2018

Sky to oppose RTE fees at joint committee meeting

Warning of consequences from RTE's plan to charge pay-TV operators

RTE said the fees proposal would allow it to reinvest in original Irish content, such as historical drama mini-series Rebellion
RTE said the fees proposal would allow it to reinvest in original Irish content, such as historical drama mini-series Rebellion
Samantha McCaughren

Samantha McCaughren

Sky and other pay-TV operators are preparing to strongly oppose proposals which would allow RTE to charge them for carriage of its channels.

They will outline their objections on Tuesday at a meeting of the joint Oireachtas committee on communications which is examining the introduction of retransmission fees.

RTE sees retransmission fees as a possible new source of revenue at a time when commercial revenue is on the slide.

It argues that indigenous programming is the most popular material on pay-TV platforms, yet the operators get the channels free of charge.

However, the pay-TV operators are vehemently against the move, fearing it could open up the way for charges in other jurisdictions.

They warn that litigation could follow the introduction of retransmission fees and claim establishing a mechanism to set fees could be fraught with difficulties.

A report by London-based consultants Communications Chambers, commissioned by Sky, Virgin, Eir and Vodafone, lays out several problems that could be sparked by the introduction of such fees. They submitted this report to the committee late last week.

The report, 'The implications of retransmission fees for Irish broadcasting', warned of "significant drawbacks", such as increased consumer prices. It claims that unintended consequences could include channel blackouts. "Such blackouts have been a frequent feature of US retransmission fee negotiations. In 2015 alone, there were 193 such cases of channels going off air, including one that lasted more than six months," it states.

Bringing in fees could also drive consumers to platforms without Irish channels. "If pay TV becomes more expensive, some consumers will drop back to free TV - but this may be Freesat, rather than Saorview, resulting in a loss of viewing for Irish indigenous channels from RTE, TV3 and TG4 (and Eir Sport). This, in turn, would result in a loss of advertising revenue and (for RTE and TG4) greater demands for public funding."

The report suggests that the fee would weaken the case for the TV licence fee, which will be damaged by 'double taxation' and the unavailability of RTE channels due to blackouts and a shift to Freesat. The double taxation argument suggests that in addition to paying the licence fee, viewers would also end up paying for RTE's carriage on pay-TV through increased charges in monthly subscriptions.

The report also warned that implementing retransmission fees would probably be complex and contentious.

"While fees between free-to-air broadcasters and platforms are rare internationally, where they do exist, they have often resulted in extensive litigation and/or channel blackouts," states the report. "The range of possible fees is very broad, and there is no solid precedent for a regulatory methodology to set them."

However, RTE believes that commercial operators, which make an estimated €560m in revenues from subscriptions in Ireland, should pay something for indigenous Irish content.

Aisling McCabe, RTE's head of platforms and partnerships, told the Sunday Independent: "There is no justifiable reason why platforms such as Virgin or Sky should get Irish free-to-air channels and content for free and then charge customers to watch these Irish channels - the most watched channels on their platforms - and not give any fair value back to these channels to reinvest in original Irish content.

"In effect, the current legislation is creating a situation where publicly funded media and indeed TV licence fee-payers are indirectly subsidising the commercial activities of hugely profitable international media companies in the Irish market."

She added that licence fee-payers were "subsidising these profitable platforms".

"By changing the legislation, RTE will have the opportunity to negotiate a fair payment for the value we create for pay-TV operators through our original content," said McCabe.

She added that RTE had strong relationships with pay TV operators and other platforms in the Irish market.

"There is no hostility between RTE and platforms," she said. "This is just about getting value, on behalf of the licence fee-payer, for the content we produce, so that we can reinvest in original Irish content."

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