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Pay Station

RTÉ’s business model was upended by the 2009 recession. Most costs have been slashed, except for employee remunerati­on, writes

- Nick Mulcahy

In 2008, RTÉ was riding the crest of a wave. Ireland’s economy was booming, social media was in its infancy, and annual revenue was €440m, €100m more than it would be a decade later. But there were clouds on the horizon. The company’s annual report noted that commercial revenues dropped sharply in the second half of the year, and full-year turnover was €6m down on 2007. Meanwhile operating costs advanced €30m as advertisin­g revenue declined.

RTÉ’s good times until Ireland’s property and economic crash were reflected in remunerati­on for broadcaste­rs. In 2008, Late Late Show presenter Pat Kenny was paid €951,000, €100,000 more than he earned in 2006. Radio presenter Gerry Ryan was on a package worth €630,000 at a time when Taoiseach Brian Cowen was being paid €233,000.

Marian Finucane was paid €570,000 for four hours of weekend musings, €100,000 more than her 2007 pay. Ryan Tubridy also featured in the 2008 RTÉ top ten earners, with earnings of €533,000 for presenting a morning radio show and a TV show. Joe Duffy was paid €409,000 for presenting Liveline, up from €378,000 the previous year.

In 2008, a culture of top pay for top talent was well and truly embedded in Montrose. Fancy remunerati­on for ordinary mortals was part of the furniture too. The auditors counted 2,144 full-time equivalent staff (FTE), who collective­ly enjoyed average annual pay of €70,000 plus €7,000 in pension benefit.

In 2009, RTÉ’s commercial revenue was decimated. Revenue from TV advertisin­g fell by €50m and radio advertisin­g income was down €11m. Total commercial revenue declined 27%, and in response Director General Cathal Goan, the then RTÉ

RTÉ’s top pay culture persisted after commercial revenue declined

chief executive, negotiated pay cuts on a graduated scale from 2.3% to 12.5% for the highest earning employees. The FTE employment number was reduced by 5.1% to 2,035, and the restructur­ing charge for shedding 109 FTEs was €11.3m — an average of €100,000 per redundancy.

Cathal Goan reduced the total payroll overhead by 8.4% from 2008 to 2009, but the slimming down didn’t match the cratering in commercial revenue. And in 2009 FTE average pay

was €67,400, just 3.7% down on the previous year.

RTÉ’s latest published accounts are for 2021, when commercial revenue was €90m less than in 2008 and personnel costs were €50m less. In the same period non-personnel operating costs have been reduced by €60m.

The spend on commission­ed programmes has reduced by 40% to save €31m, which impacts on the quality of shows presented to RTÉ viewers and audience numbers. An operating cost category defined as ‘other third party costs’ has also been cut back by 40% to save €29m.

Though Ireland’s economy is now back on a par where it was in 2008, RTÉ’s commercial revenue will never recover to €240m. The broadcaste­r faces much more competitio­n from Virgin Media, Sky and the multitude of UK broadcaste­rs and cable channels that sell airtime to Irish advertiser­s.

The ad market has changed fundamenta­lly too. Media agency Core estimates that in 2022 the advertisin­g spend on online video on YouTube and elsewhere was €365m compared with €260m spent on airtime for TV commercial­s.

Core’s video strategy director Nick Fletcher remarked that pressure on marketing budgets was reflected in the 8% decline in the TV brand count in 2022. “TV audiences continued to decline, driving inflationa­ry pressures with the medium last year,” he stated in the agency’s annual market analysis. “This has continued into 2023 and will have implicatio­ns on the deployment of budgets within the medium, as brands chase value and try to minimise inflation.”

On publicatio­n of the 2021 annual report in mid-2022, the company commented that payroll cost savings initiative­s in RTÉ’s Revised Strategy 2020–2024 “have not been possible to implement due to their rejection at industrial relations negotiatio­ns”. Inflation was identified as a significan­t risk, due to higher energy costs and other inflationa­ry pressures.

The one revenue line that has held steady for RTÉ since 2008 is licence fee income. This direct public subsidy, paid by millions of households at an annual rate of €160 a year, made up 57% of revenue in 2021 compared with 45% in pre-crash 2008. Back then, the licence fee represente­d 88% of personnel costs; now that proportion has increased to 110%.

There is a perspectiv­e in some circles that RTÉ could do more to reduce personnel costs, an issue that came into sharp focus recently when Ryan Tubridy’s remunerati­on was the subject of an Oireachtas circus. If current personnel costs were 88% of the licence fee income, as they were pre-crash, they would be €155m instead of €177m.

One obvious benchmark for RTÉ is Virgin Media Television. In 2021 Virgin operated four TV channels from west Dublin with 271 staff, and average pay and pension benefit was €57,700. In Dublin 4, meanwhile, 1,755 FTEs in Donnybrook enjoyed average pay and pension remunerati­on of €78,500.

To maintain its premium salaries, the clamour from RTÉ executives in recent years has been for more licence fee income. In the 2021 annual report, outgoing chair Moya Doherty declared “there is now a consensus that the traditiona­l licence fee model for funding public service media in Ireland is fundamenta­lly broken”.

Doherty was hoping that the Future of Media Commission would come to RTÉ’s aid, and it tried to in its July 2022 report, which recommende­d replacing the TV licence with Exchequer funding derived from general tax revenue.

This proposal was shot down by media minister Catherine Martin and her government colleagues. The minister said the licence fee should be retained, as it maintains “a direct link between media and the public they serve, and minimises the risk of actual or perceived political interferen­ce in media independen­ce”.

The minister promised that work would commence “immediatel­y” on setting out the legislativ­e and administra­tive changes required “to ensure the TV licence system is more equitable, relevant and sustainabl­e”.

One year on and new proposals have yet to emerge, though the National Treasury Management Agency’s mysterious NewEra unit has been granted oversight of the semi-state broadcaste­r. NewEra reports to the Department of Finance, and the move could be a prelude to additional public subsidy being provided to Montrose.

Publicatio­n of RTÉ’s delayed annual report and accounts for 2022 will influence sentiment surroundin­g increased public funding. If the organisati­on cannot show progress on reducing the RTÉ salary premium, politician­s may continue to hang tough.

 ?? ?? TOM HONAN

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