An Oireachtas report on funding public service broadcasting has recommended replacing the TV licence fee with a household charge. The report’s logic is dubious, and other media besides RTE are entitled to subsidies too

What to do about public funding for RTE, the state-owned broadcaster? After booking a €20m loss in 2016, and threatening to rationalise its two orchestras to save money, RTE wants a bailout. Specifically it wants the licence fee replaced with a household charge, so everyone in the country would pay for RTE’s overheads whether they have a television or not.

The RTE subsidy has been exercising members of the Oireachtas Joint Committee on Communications, which examined the funding of public service broadcasting recently. The politicians heard from RTE that its role is central to the common good.

“A diminished national public service media does not serve the national interest,” the organisation stated in its JC submission. “And yet despite numerous independent reports indicating that RTE needs additional public funding, to date there has been no progress on reform of what is now one of the most inefficient and ineffective TV licence fee systems in Europe.”

This argument was accepted by the Joint Committee, made up of seven TDs and four senators. The committee report concluded: “The current funding model is not fit for purpose in today’s highly technological advanced society where television sets are no longer the only method of media content viewing.”

After hearing evidence from various parties, most of them vested interests, the Joint Committee recommended that charging for public service broadcasting should be expanded to include every household, and that responsibility for the TV licence fee collection should be handed from An Post to the Revenue Commissioners.

In Association with

The Joint Committee also called for the €160 licence fee to be indexed to consumer prices, claiming, incorrectly, that if the charge had been indexed since January 2008 in would be €175-€180 in 2017. In fact, by reference to the Central Statistics Office inflation calculator referenced in the JC report, the correct inflation-adjusted figure would be €161.38.

The eleven legislators seem to have bought into the “prevailing consensus from the stakeholders” who gave written or oral evidence to the Committee. “There is broad acknowledgement that the existing funding model is increasingly redundant and anachronistic as it has been significantly undermined by the clear shift in public service media consumption patterns away from the traditional television set and towards an increasing selection of digital devices,” the JC report stated.

How extensive is licence fee evasion?

So just how broken is the current television licence fee system? Where is the evidence that it’s ‘not fit for purpose’?  Despite shortcomings, the licence fee is a very effective revenue raising mechanism. In 2016, €214m was collected from licence fee payers, equivalent to just on half the yield from the Local Property Tax.

In 2016 there were 1,445,000 licence fee sales, which was 33,000 more than four years earlier, according to An Post. Regulator ComReg reports that in 2016 there were 1,574,000 ‘TV Homes’. This number comes from Nielsen, which operates the TAM audience measurement system.

Nielsen estimated 41,000 of those households watch television on mobiles or computers instead of a television set, categorised as IPTV. Of the total TV homes therefore, 91.8% paid a licence fee in 2016, and excluding the IPTV homes TV licence penetration rises to 94.3%.

If there had been 100% licence fee compliance in 2016, there would have been 88,000 more licence fee sales, grossing €14.1m more income, of which €11.7m would have been due to RTE. Whether any other collection agency would have more luck than An Post in achieving 100% licence fee compliance is a moot point.

Of the TV Homes, 1,387,000 are multi-channel customers of cable or satellite providers. The other 187,000 TV Homes are classified as ‘Irish Terrestrial’ that receive only RTE and TV3 channels using an aerial or via Saorstat. In terms of licence fee enforcement, such households are much more difficult to identify.

According to ComReg, the number of IPTV ‘TV Homes’ doubled to 83,000 in 2017, though cable/satellite TV Homes also increased. This trend is facilitated by RTE itself. With the RTE Player, online and in app format, people can watch nearly all RTE output on the internet. If RTE scrapped these services, more people would have to buy a TV set to watch their RTE sports broadcasts and programmes.

It is perfectly legal for people to seek exemptions from the TV licence fee when they don’t possess a traditional TV set. Conflicting evidence was presented to an Oireachtas Joint Committee about the number of these exemptions.

RTE claims that exemptions increased from 41,000 in 2009 to 130,000 in 2016. The Department of Communications says that  in 2015 An Post received 7,200 statutory declaration forms seeking exemptions.

Fragmented TV audience

What’s clear from the data is that a large number of households in Ireland shun TV viewing. The Central Statistics Office counted 1,702,000 private households in Ireland in April 2016. That’s 128,000 more households than the TV Homes counted by Nielsen, and 200,000 more households than residences where there are TV sets on the premises.

In its submission, RTE reminded the Joint Committee that “central to RTE’s public purpose is bearing witness to and reflecting the world in which our audiences live”. The Montrose statement went on: “In a time of such fragmentation and globalisation of media, and so many competing and potentially misleading sources, this service has never been more important.”

The quality of RTE’s television and radio output bears out this bold claim. It would help though if more people were tuning in. According to the Joint Committee report, the share of TV viewing for RTE One and RTE2 in June 2017 was 22.8%. The three TV3 stations, which receive no public subsidy, were on 16.6%.

Television viewing habits have become highly fragmented. In June 2017 the Top 10 channels by audience share accounted for half of total TV viewing in Ireland. That included RTE, TV3, BBC1, BBC2, Channel 4, Sky 1 and Sky News. The other half the TV audience is watching Netflix, MTV, Nickelodeon, Alibi, Discovery and everything in between.

As well as undercutting RTE’s claim to national importance, international TV channels suck revenue that would otherwise go to Irish broadcasters. The Department of Communications estimates that ‘opt-out’ advertising garnered by 39 internationaldigital channels available to viewers in Ireland equates to €50m, or 25% of the total TV advertising spend.

Are GAA matches really public service broadcasting?

What is public service broadcasting? RTE’s own definition is as follows: “At its best, public service media provides a compelling response to the challenges and opportunities of the digital era. It ensures society can have inclusive and open debates, that the marginalised are included and all are represented.

“It investigates and reports both fearlessly and with great care. It ensures in an age when it is so easy to find and access information and news, that there is a source that can be trusted. It helps sustain and support creativity, artistic and cultural expression and can now seek to engage audiences around the world. It ensures that there is a publicly owned space where we can celebrate together; experience and try to understand moments of crisis together; and discuss, debate, agree and disagree.”

The ‘celebration’ mission allows RTE to claim that sports coverage is a public service. RTE2’s expenditure on indigenous programming in 2016 was €48m, including €33m on sports programmes. The licence fee subsidy for that output was €40m, or 84% of the total. In effect households stumped up €28m to watch GAA, rugby and soccer games on RTE, events that would gladly be broadcast by rival channels without a subsidy.

Yet without those sports events RTE loses much of its centrality to Irish life. Of the ten most popular TV programmes in Ireland in 2017, seven were sporting events shown on RTE. For the 2018 Top Ten, TV3 will likely make the list for the first time, having outbid RTE for the rights to Six Nations rugby matches.

On the flagship RTE1 television station, indigenous programmes, and broadcasting charges, cost €130m in 2016, including an €9m outlay on sport. The licence fee subsidy for that output was €63m, or 48% of the cost.

That means that all the current affairs and news teams from Prime Time to the Six One effectively have half their salaries paid by householders. The same level of subsidy is afforded to all the chat show, current affairs, drama and factual output on Radio 1.

This level of public subsidy gives RTE a huge advantage over private sector media who operate without a subsidy and perform the same function as RTE. Newspapers such as The Sunday Independent and The Irish Times reflect and challenge what’s going on in Irish society to the same extent as RTE’s public service mission statement, yet neither title receives a cent in subsidy.

Why no PSB subsidy for local radio?

Also not subsidised are the 34 national and local radio stations that make up Independent Broadcasters of Ireland, who between them employ 1,300 people (about 70% of the RTE headcount) and are listened to daily by 70% of the population.

In its submission to the Joint Committee, IBI called for a redefinition of public service broadcasting. “Currently the common understanding is anything that comes from RTÉ or TG4. This definition is based on the broadcaster that produces the material rather than the type of programme material produced. It is a throwback to a time in Ireland when the only broadcasting services available were those of the state funded broadcaster. The IBI’s opinion is that public service broadcasting can no longer be defined in terms of ownership structures, but rather in terms of content.”

Though they’re not subsidised from the licence fee, local radio stations are required by their license terms to ensure that 20% of their output is news, current affairs and talk content. Not unreasonably, the IBI wants €30m to €50m from the licence fee to fund that public service output.

Away from television and radio, RTE sees its public service remit extending to websites that compete head on with private sector sites for advertising. This sticks in the craw of NewsBrands Ireland, the trade body that represents 16 Irish national daily, Sunday and weekly newspapers.

“National newspapers and their online editions contribute hugely to the cultural, social, economic, intellectual and political life of Ireland and are vital to the democracy of our state and the literacy of all people in Ireland,” NewsBrands told the Joint Committee.

The newspapers lobby group reiterated its concerns about RTE’s very high cost structure and its ability to leverage public funds to compete unfairly with newspapers, particularly in the digital space.

“If a newspaper launches a website, it has to generate sufficient revenues from the website to make the site viable. Its ability to do so is severely prejudiced by the fact that RTE does not have to turn a profit on its websites. Indeed, it can avail of publicly-funded content and use it for commercial gain.”

The JC heard that since 2007 sales of printed daily newspapers have declined by almost 41% and 47% for Sunday titles, while advertising revenue has decreased by 57% in the same period. NewsBrands went on to state that “the time is right” to extend public funding to national newspapers who contribute to our distinctive way of life.

Their submission stated: “It cannot be said that broadcasters are in a different place than the press. Direct financial support may take the form of production aid for newspapers satisfying public interest criteria, for media literacy projects, developing journalistic quality and training, online service development and distribution. Such support should be capable of being used for national newspapers that have a public interest editorial mission.”

Unfair advantage

Similar concerns were voiced by Journal Media, publisher of TheJournal.ie, one of the top three digital sources of news in Ireland, and where 68 people are employed, most of them journalists. CEO Adrian Acosta told the Joint Committee that the marketing value and brand awareness generated by the promotion in RTE’s TV and radio channels of its digital properties gives RTÉ an enormous advantage.

Acosta contended: “RTE’s dominance and dependency on commercial income hinders the indigenous private enterprises that also fulfil public services, for example the provision of news. Our society would benefit from a different approach: narrowing RTE’s remit to the provision of a public service that the private sector is unlikely to offer, and funding this remit sufficiently to avoid a dependency on commercial revenues.”

Acosta noted that while RTE digital properties can exploit content that is paid for by public funding, its competitors cannot. “A possible way to address this unfair advantage content would be to make this publicly funded content available free of charge to private enterprises,” Acosta suggested. “Publishers could build on this content adding value and expertise or simply distribute it in its original form reaching larger audiences.”

In its conclusions, the Joint Committee kicked to touch on whether the licence fee or its mooted household charge replacement should be spread more widely. The JC stated: “The ongoing review of the Future Funding of Public Service Broadcasting to be published in mid-2018 must consider the wider scope of how public service content provision is evolving beyond traditional broadcasting systems.”