RTÉ should review loss-making public service broadcasting, internal Department of Public Expenditure documents say

THE Department of Public Expenditure said RTÉ needs to cut costs more before any commitment should be made to give them extra funding.

RTÉ should be asked to review loss-making public service broadcasting and even look at what services it was providing, an internal Departmental briefing note says.

The memo for Minister Paschal Donohoe was prepared as part of discussions over the sale of lands at the broadcaster’s campus in Montrose.

It said that both RTÉ and the Department of Communications were looking for funding for the broadcaster to be restored to 2009 levels when it was €20 million higher.

However, the Department of Public Expenditure said that they “did not necessarily accept that further additional Exchequer funding should be provided or that the level of Exchequer funding should be restored to its peak”.

The submission said that they expected RTÉ would again ask for more money in Budget 2018 and that chair of the board Moya Doherty was seeking a meeting to discuss the broadcaster’s “poor finances”.

It said that the broadcaster had done all it could in cutting operating costs but that savings might be available elsewhere.

“That does not mean that the level of loss-making public service broadcasting could not be reviewed and/or that non-Exchequer solutions to RTÉ’s problems could be pursued,” it said.

The report said other options were available including increasing the licence fee, tackling its evasion, and targeting “advertising leakage”.

“In short, all factors driving RTÉ’s costs (including assumptions about what services it should be providing) and revenues should be examined before concluding that additional Exchequer funding should be given” it said.

Minister Donohoe was also told he should approve the land sale at Montrose and that the money raised was not going to be used to shore up operating losses.

RTÉ had not been prepared to share what they hoped to receive from offloading the nine acres saying that it was “commercially sensitive”.

However, the Department significantly under-estimated the amount that RTÉ did eventually receive saying a sale figure of between €50 and €70 million could be expected. In the end, the land was snapped up by Cairn Homes for €107.5 million.

The briefing note, obtained under FOI, also warned that the sale of the lands could have a significant impact on the amount of fiscal space available to the government.

It illustrated how it would be preferable if RTÉ spent the money they raised very quickly because of EU rules on accounting for land sales.

The submission explained: “If €50 million was received in 2017 and was spent by RTÉ in 2017, it would have no impact on fiscal space in 2018.

“If €50 million was received in 2017 and was spent by RTÉ in 2018, it would reduce fiscal space in 2018 by €100 million.”

A separate briefing document prepared for Communications Minister Denis Naughten explained that just over one third of the money raised was going to be used to fund “organisation restructuring”, understood to be a redundancy scheme.

It said that 46% of the cash would go towards “capital investment in digital technology and services and upgrades of buildings in Donnybrook to facilitate collaborative work spaces”.

Just under a fifth of the money was going to be used to refinance existing debt, the memo said.

Minister Naughten was told that early in 2017 was the best time to sell the land to avoid the property slowdown that comes each summer, and the risk of any unforeseen economic shocks.

The submission also explained how sales agent Savills thought it would be better not to put an advance valuation on the property because it could have a “detrimental impact” on the bidding process.

It said that Minister Naughten should approve the process only if the offer met “value expectations” and that his consent would be for twelve months only.

The Department of Public Expenditure said in a statement that it had a shareholder function in relation to how commercial state bodies like RTÉ operate.

They said: “[We believe] that all factors driving RTÉ’s costs should be given consideration as part of ongoing efforts to ensure the commercial sustainability of the broadcaster.

“In relation to funding, an additional €5 million was provided to RTÉ in Budget 2017. The Department … has no further comment to make on the content of this submission.”