Sky and Virgin ‘should pay RTE €30m to carry its TV channels’

Broadcasting shake-up may boost free-to-air TV demands for retransmission fees, writes Samantha McCaughren

PAY-TV operators Sky and Virgin Media should pay RTE up to €30m a year in order to carry its channels, according to a report by UK experts.

TG4 and TV3 could also benefit to the tune of €8m annually, based on a detailed analysis of the financial benefit to Sky and Virgin of carrying free-to-air stations, the most watched channels on these platforms.

So-called retransmission fees are worth over $6bn a year in the US. Irish and British broadcasters have been seeking such fees for a number of years, but have met with fierce opposition from cable and satellite operators.

Communications Minister Denis Naughten is reviewing Irish broadcasting legislation and is considering introducing retransmission fees.

The report, by London-based media consultants Mediatique, commissioned by RTE, was released to the Sunday Independent under FOI after an initial refusal was appealed.

The authors found that if Sky and Virgin Media no longer carried RTE channels, it would have a significant negative effect on their revenues.

For example, 49pc of respondents to research said they would leave Sky if it did not carry free-to-air channels such as RTE and TV3, while 63pc said they would leave Virgin, formerly known as UPC. Many of those who would stay with the service would expect discounts if the channels were not available.

It then weighed up this against the negative impact on RTE and TV3 if they were not available on these platforms. Between them, Sky and Virgin have over one million customers.

While losing the audiences of the pay TV platforms would have implications for ad revenue for the channels, Mediatique concluded that the loss would be far greater for Sky and Virgin.

Based on the losses to both parties, it worked out a ‘fair’ price for carriage of the freeto-air channels.

The biggest amount would come from Sky, with the report concluding that RTE could expect up to €19m from Sky and €11m from Virgin.

The previously unpublished report was completed at the end of 2014.

Last week, author Mathew Horsman of Mediatique told the Sunday Independent that the numbers and quantum proposed remained largely unchanged. “Sky does not pay to retail free-to-air channels,” a spokesman said.

Virgin had no comment. However, if the legislation is changed, very tough negotiations would be expected.

An RTE spokesman said: “Across a number of countries now, much fairer systems exist whereby terrestrial broadcasters can negotiate fair compensation for the significant value they create for TV platforms.”

He added that a “rebalancing” of Ireland’s legislation was overdue.