Samantha McCaughren: 'Behind the smiles and razzmatazz, how will RTE manage to balance the books?'
Some difficult decisions must be made if RTE's losses are not to continue mounting up, writes Samantha McCaughren
The lights of RTE's studio four shone brightly last Thursday as RTE director-general Dee Forbes chatted with Ryan Tubridy ahead of the launch of its autumn season, while the likes of Donncha O'Callaghan, Jennifer Zamparelli and Mairead Ronan settled into their places in the audience.
While the event was heavily coated in TV razzmatazz, Ms Forbes could not get away from the tremendous challenges facing the organisation.
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Although she firmly said she would not discuss funding or the licence fee at the launch, her opening comments made several pointed references to public service broadcasting.
"You know, and we certainly know, that public service media has never been more important. Every country deserves an independent public media that challenges," she proclaimed. "Every country deserves independent public media that entertains and importantly supports the entire creative and audiovisual sector."
It was a defiant message to Government just weeks after a blow to RTE's long-running campaign for significant improvements to funding. Communications Minister Richard Bruton announced just a few weeks earlier that a broadcasting charge would be introduced in five years' time and that the licence fee collection contract would be put to tender - so no quick fix for RTE's financial woes.
The announcement has kicked the ball back into RTE's court, with the RTE board and executive now focused on drawing up a cost-cutting programme. It is due to be announced in the first week of October and industry sources believe that if RTE is to survive, it will need to be the organisation's most radical financial overhaul to date.
So how has the organisation found itself in this position?
RTE has for decades found itself swinging in and out of financial peril. Its recent string of losses can trace their origins back to the financial crash. Although RTE has broken even on occasion over the past decade, its revenues continue to be around €100m lower than they were in the boom.
And the losses have piled up. It lost €2.2m in 2015, €19.5m in 2016, €6.3m in 2017.
In 2018, RTE lost €13m, despite the fact revenues were up slightly at €339m. In fact, over the past four years RTE has lost more than €40m during which time it has enjoyed revenues of well over €1.3bn, which is a staggering sum in a media market of Ireland's size. More than half of that money comes from ordinary people who pay their licence fee. Yet RTE has continued to rack up losses and seems unable to adequately pare back its cost base.
Some 18 months ago, Ms Forbes and senior executives laid bare their view that RTE's financial situation was unsustainable without a major boost to funding via the licence fee. "The money we are getting now is just not doing what we need to do," she told the Sunday Independent in February 2018. "We get criticised on a regular basis for repeats and we are doing that because we just don't have the wherewithal to do more.
"We have been in this cycle for a number of years. There have been numerous reports all saying RTE is not sufficiently funded. We can't plan, we can't properly invest and can't really take our remit forward in the way that we would like to. We have had deficits for a number of years and that's not sustainable."
One former broadcasting executive has some sympathy for RTE. Its obligations are set down in law and are wide-ranging. However, he added that RTE doesn't seem willing or able to let go any of those obligations, regardless of how onerous they are.
"It doesn't seem to be able to stop doing anything," he said, "But you can't do everything. RTE has €100m less than it did 10 years ago. So it's in a dilemma."
It has also been thwarted in attempts to cease services such as Aertel, RTE's teletext service. The Government does not want to provide extra funding for RTE but there has been little support for attempts to trim services.
Last October, RTE had cause for optimism when the Broadcasting Authority of Ireland, which regulates broadcasters and advises the Government on funding, said RTE should get a significant funding top-up of €30m. But sources close to Government had increasingly played down the likelihood of a big funding boost since the start of the year. Many observers believe RTE has no one but itself to blame for finding itself where it is today. Yes, it has brought down the salaries of its highest-paid presenters. But this is more a public relations exercise than a fundamental reduction in spending.
One of Ms Forbes's biggest cost-cutting measures to date has been a redundancy programme targeting up to 300 staff. Although the Department of Public Expenditure felt the scheme was too generous, RTE staffers were slow to take it up. Only around 160 people have left under the programme.
A revealing insight into the Government's position was provided in some briefing notes for Taoiseach Leo Varadkar ahead of a meeting with Ms Forbes last year. Outlining RTE's requests for more funding, the note said: "It might be argued that a more radical re-thinking of RTE's role in the digital era is required, rather than just relying on further incremental increases in public funding."
That is now the challenge ahead for Ms Forbes and the board of RTE.
So what can RTE do to make substantial savings and make the business sustainable for the future?
Ms Forbes told the Sunday Independent last Thursday that difficult choices would have to be made. While she was very focused on the positive mood of the day and the buzz around the content announced, such as a new series of Young Offenders, she could not escape the jokes made by the presenters of the new season, Doireann Garrihy and Eoghan McDermott, about how broke the organisation is.
"You know the numbers," she said. "We're operating with €100m less a year since 2008, so we are having to make very, very difficult choices. We're in review at the moment to review what we can continue to do, you can't do everything and that has been a fact of life for some time. We keep fighting on that front."
A 2013 report by NewEra, which oversees the State's commercial companies, made a number of recommendations about what RTE should consider if its financial situation did not improve. The main one to be acted upon was the €107m sale of RTE's Montrose site, which was concluded over two years ago. RTE has ring-fenced the proceeds for investment in technology and infrastructure rather than the day-to-day running of the organisation.
The report suggested that other services could be cut, mainly those which are already provided for by commercial operators. This pointed to potentially selling or closing 2FM or RTE2 television. These would be extremely radical decisions and ones that RTE management is unlikely to stomach. Some sources have suggested that RTE may have to adopt a more 'targeted' redundancy programme, which would be very unusual in a semi-state company.
Behind the showbiz smiles at the autumn launch is a growing sense of concern in RTE, with staffers wondering just how radical the looming changes are going to be.
What is now clear is that the difficult decisions can wait no longer.