Traditional radio and TV broadcasters in Ireland, of which RTÉ is by far the largest, were facing serious financial problems long before the summer controversy broke.

RTÉ would be in financial trouble if its top 10 star presenters worked for nothing. Between them, their earnings account for under 1% of RTÉ’s annual spending.

RTÉ may have been paying them more than was needed, but the station’s biggest problem is that its two key sources of revenue are faltering.

ADVERTISEMENT

Unlike some other State broadcasters, RTÉ is dual-funded: it receives almost €200m per annum from Government, the lion’s share of the annual tax on ownership of a TV set, but is also permitted to earn around €150m in commercial revenue, mainly payment for advertising slots.

Its competitors, companies such as Virgin TV or the radio channels Today FM and Newstalk, rely almost entirely on advertising.

UK contrast

This contrasts with the situation in the UK, where the BBC does not accept ads at all in its home market on either radio or TV, relying entirely on its £3.8bn annual take from the license fee.

The commercial stations with which the BBC must compete have the advertising market to themselves and they have been able to match the BBC’s financial resources. This yields some semblances of competitive equality in the TV marketplace.

In Ireland, RTÉ has been able to retain audience leadership in national radio and television and dual-funding has surely helped. The commercial stations, naturally, would like if RTÉ did not compete with them for the advertising dollar.

Neither license fee revenue nor advertising have been buoyant in recent years and the weakness in RTÉ’s income provides the backdrop to the current controversy.

Pay rates

Pay rates and pension entitlements have been under pressure and rank-and-file staff have reacted angrily to the revelations.

The Government has declined to increase the license fee (currently €160, versus €185 in the UK) since 2008 and evasion has been on the increase. Recent weeks have seen an increase in the number of householders refusing to pay the license fee.

Advertising revenue for both print and broadcast media has been weakening for almost two decades and the dominance of the digital platforms continues to grow.

The outlook for both of RTÉ’s revenue streams is poor. License fee compliance may weaken further and some advertisers have withdrawn support.

The Government’s commission on the media, which reported in July last year, suggested a new form of household levy in support of public service broadcasting, designed to replace the license fee. The politicians, fearing a rerun of the water charges debacle, ran for cover and will run further and faster now.

Any form of universal charge, whatever the name chosen, will now be seen as an alternative and compulsory payment to RTÉ

Any form of universal charge, whatever the name chosen, will now be seen as an alternative and compulsory payment to RTÉ and it may already be a dead duck in political terms.

An increase in the current €160 charge is hardly likely either and RTÉ will have to think hard about its 1,800 staff complement: Virgin’s TV channels employ about 200.

The leader of the Aontú party and its sole TD Peadar Tóibín recently suggested on RTÉ’s The Week in Politics programme that the missing RTÉ revenue might be replaced from taxation.

He did not have time to elaborate, but if he feels that the license fee is not a tax, he is mistaken. It is a once-a-year levy, on pain of prosecution, liability to which arises from ownership of a TV set.

It is a tax, specifically an earmarked or hypothecated tax, the revenue from which goes to a segregated fund, almost all of which is remitted to RTÉ.

Since virtually every household in the country has an appliance which can receive free-to-air TV signals, it is very close to a poll tax, a flat tax on everyone without reference to income or any other indicator of ability to pay.

Defenders

Defenders of the current arrangements often speak as if the license fee was akin to a subscription, which delivers all of RTÉ’s many channels and online services. But it is not. You must pay even if you never watch RTÉ at all.

However the current row plays out, the future financing of public service broadcasting, if this is what people want, will have to change.

The license fee system is a relic of a bygone era, before there were any private TV or radio channels and RTÉ was a statutory monopoly. It would not be tolerated in print media, where all compete on an equal, if precarious, basis.

The most likely outcome will be a direct State subvention to shore up RTÉ revenue, with some severe pruning of non-broadcast staff. It is difficult to see how the dual-funding model can survive the revelations about financial mismanagement in Montrose.