The Broadcasting Authority of Ireland has, today (18th July), published its recommendations in respect of the required levels of funding for the public service broadcasters (PSBs), TG4 and RTÉ, over the next five years.
Under section 124(8) of the Broadcasting Act, 2009, the BAI is required, on a five-yearly basis, to conduct a review of the adequacy, or otherwise, of public funding to enable public service broadcasters to meet their public service objects. The review is in addition to the annual reviews of public funding undertaken by the BAI and it incorporates the consideration of a broad range of matters, including a detailed analysis of costed strategic plans submitted by both PSBs; the multi-annual funding requirements of the PSBs; the level of commercial funding available; and developments in public service broadcasting internationally.
The BAI commissioned Crowe Horwath to undertake the five-year funding review, and the report produced was used to inform the Authority’s considerations and recommendations on future funding for RTÉ and TG4. The Authority’s report and recommendations were submitted to the Minister for Communications, Energy and Natural Resources, Mr. Pat Rabbitte T.D., were considered by cabinet on the 16th of July and a Government response was issued yesterday (Wednesday, July 17th).
The Minister has acted quickly in reviewing the report and associated recommendations submitted to him by the BAI and the speed of the Government’s response is particularly welcomed. The Authority is also satisfied that the Government’s position is in broad alignment with that of the BAI’s.
The Authority has made a range of recommendations in respect of both RTÉ and TG4, together with recommendations relating to the process of ensuring that the future use of public funding by public service broadcasters is adequately and appropriately accounted for.
In the case of RTÉ, the Authority has recommended:
– That there should be no immediate increase in licence fee funding. However, an increase in public funding will be required for RTÉ over the next five year period in order to ensure further investment in RTÉ’s programme output;
– The increased funding would be conditional on the achievement of further cost reductions and savings by RTÉ;
– The Authority has further recommended that any funding increase should be channelled, to the greatest extent possible, through the independent production sector and should be clearly linked to a clear articulation by RTÉ of what the added funding will deliver in terms of additional programming;
– The Authority has also recommended a new approach to the public funding of RTÉ. Specifically, there should be a re-balancing between the public and commercial funding of RTÉ and the Minister should determine a point above current licence fee revenue, where further public funding will be matched by a reduction in commercial revenue for RTÉ;
In relation to TG4, the Authority proposes that funding for TG4 be maintained at current levels. It recognises that further cost savings and efficiencies cannot be secured under TG4’s current operational model but that it should give additional detailed consideration to future audience patterns and to consider whether existing resources could be deployed differently.
The Authority has also recommended legislative change to give responsibility to the BAI for determining advertising limits across all broadcasters, replacing the current system where three separate regimes exist in respect of determining advertising minutage.
Finally, the Authority has recommended a number of refinements to the existing annual process of reviewing public funding, which would enhance the level of accountability on the part of both RTÉ and TG4 and create clear expectations regarding information required year-on-year.
In publishing the BAI’s recommendations, Chairperson of the Authority, Bob Collins, said: “In considering our recommendations on the funding of public service broadcasting, the BAI was keenly aware of the necessity of each PSB presenting schedules that reflect and inform the lives of Irish people, and the critical role which Irish-made programming plays in this. Another key consideration for the BAI was the importance of exploiting the possibilities offered by digitalisation within the broadcasting sector.
“It is against this backdrop that the BAI has recommended further investment in RTÉ’s programming. Such investment would be dependent on the broadcaster demonstrating greater scope for cost reductions and increased potential for revenue streams. Given the importance of the independent production sector in ensuring creativity and innovation in the broadcasting sphere, the BAI recommends that – as far as possible – increased funding to RTÉ be deployed through this sector.”
Speaking about the report findings in respect of TG4, Mr. Collins said: “The Authority recognises the very particular circumstances and challenges faced by TG4. However, we would need significantly more detail from the broadcaster on how it might operate with only marginal increases in public funding, including how it can adapt to a changing environment.
“The BAI welcomes the announcement of the Government’s decisions in respect of the five year review and that the Minister has asked NewEra to conduct additional assessments in respect of efficiency within RTÉ and the scope for optimising the use of content commissioned from the independent production sector.
“The Government decision to integrate the review of advertising minutage with the BAI’s role is very much welcomed. It meets a long-standing objective to have flexibility in adjusting the advertising potential of commercial broadcasting and to consider the balance between public and commercial funding for RTÉ and TG4”, said Mr. Collins.
The BAI is now in the process of devising an implementation plan to progress the recommendations contained in the five year review and will be meeting with the Department, RTÉ and TG4 in the coming weeks in this regard.
Media Queries to:
DHR, Tony Heffernan
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Summary of Process and Recommendations
Five Year Review of Public Funding for Public Service Broadcasters
The BAI is required, under section 124(8) of the Broadcasting Act 2009 to carry out a review of the adequacy or otherwise, of public funding to enable a corporation (i.e. RTÉ or TG4) to meet its public service objects.
The BAI procured the services of Crowe Horwath, through a public tender process, to undertake the review and to produce a report for the Authority’s consideration. Taking into account the statutory requirements as to what the review should incorporate, the key deliverables for the project were as follows:
– Market analysis of future prospects for the audio-visual and communications market in Ireland, with particular focus on broadcasting; advertising/subscription market; impact of technology;
– Research on developments in PSB internationally, with a particular focus on content, technology, funding and regulatory/governance approaches. Research report and analysis on methods for evaluating overcompensation in dual-funded broadcasters in EU;
– Detailed analysis of a costed strategic plan submitted by each PSB for the five year period 2013-2017, incorporating future efficiencies and investment plans and demonstrating clear allocation of public funding; potential developments and a quantification of any impact of changes in public funding. Such analysis would also include an assessment of the degree to which accounting separation is achieved;
– Audience research exploring genre importance; satisfaction with PSBs public purposes; perceived value for money; importance of wider, non-broadcast content to delivering public service goals;
– The development of a framework of annual broadcaster returns, including the identification of information critical to the process of conducting annual reviews of public funding;
From July-December 2012, Crowe Horwath worked closely with both RTÉ and TG4 to ensure that the plans submitted by both PSBs adequately addressed the project deliverables. Analysis of the plans and completion of all other work associated with the project was completed by April 2013 and was presented to the Authority over a series of meetings in late April/May 2013.
The Authority endorsed many of the recommendations contained in the report produced by Crowe Horwath. In addition, the Authority made a number of other recommendations, building on those contained in the Crowe Horwath report and reflecting the Authority’s own public policy concerns in respect of public service broadcasting.
Taken together, these recommendations form the basis of the BAI’s submission to the Minister for Communications, Energy and Natural Resources, which was considered by Cabinet on 17th July.
The BAI is now in the process of drawing up an implementation plan to give effect to the recommendations made in its report, and reflecting the decisions of Government.
– The costed five-year strategic plan, as submitted by RTÉ, is affordable and will likely sustain existing levels of public service in the short to medium-term. However, the plan presented does not represent a satisfactory level of service to meet the projected needs and expectations of the audience in the evolving media landscape;
– An increase in the range and level of Irish-made programming will be necessary to offer attractive and culturally relevant services to the Irish audience and to enable indigenous Irish broadcasters to compete in the current and future media landscape. Therefore a greater level of public funding should be made available to RTÉ, subject to four conditions:
- The full potential of reductions in costs and increases in revenue should be realised;
- Any funding above the current level should be deployed to the greatest extent possible through the independent production sector;
- Any additional funding should be made available only in respect of additional programming (or programme-related investment) clearly identified in some detail in advance ;
- There should be a new approach to public funding. The Minister should determine a point above the current level of licence revenue where further public funding will be matched by a reduction in commercial revenue for RTÉ, achieved through a restriction on commercial activities;
– An independent, objective review should be commissioned to determine the scope for greater use of outsourced production by RTÉ, to definitively identify whether greater value for money would be obtained in the long run from transferring programme production from in-house to external resources;
– RTÉ should consider the proposals set out for additional services and test these against key market and strategic challenges before concluding whether such opportunities are worthy of investment;
– RTÉ should develop formal policies and procedures with respect to its separation of commercial and public service activities, the methodologies used during the allocation of costs and the commercial arrangements entered into between commercial and public service activities;
– RTÉ should further develop its accounting and financial reporting methodologies to exercise more effective internal control over costs, and to provide greater assurance to the regulator and Government regarding fitness for purpose of these methodologies. This exercise should be overseen by the regulator.
– The Authority accepts and endorses the finding that scope for further efficiencies at TG4 is extremely limited and that TG4 is operating as efficiently as possible under its current operational model;
– TG4 makes an ambitious case for growth and expansion, requiring substantial increases in funding to achieve what the Authority believes to be an optimistic increase in share. However, the Authority appreciates the particular statutory role that TG4 has and the related, significant challenges, unique to the nature of its statutory brief;
– The Authority recommends the retention of the existing level of public funding for TG4 at this time;
– In light of the significant uplift in public funding which TG4 has requested, the Authority has advised that the Minister should request TG4 to investigate a more radical costed five-year strategic plan, examining what could be achieved in terms of its schedule aspirations by differently deploying existing resources or with a range of increased funds well below the level sought in the TG4 submission;
– TG4 should further develop its audience share metrics to identify its share among Irish language speakers, in order to facilitate a review of its effectiveness in reaching its core audience during future review processes;
– Structural changes, including closer relationships with RTÉ, merit attention. Such exploration might raise matters touching on aspects of public policy that, in turn, would require further consideration by the Minister and Government;
– The Authority recommends a change to the legislation in respect of the regulatory regime for determining advertising limits for public service and commercial broadcasters. The Authority recommends that responsibility for determining advertising limits should rest with the Authority with a provision, if considered necessary, that the consent of the Minister be required for any adjustments in the case of RTÉ.
ANNUAL FUNDING REVIEW PROCESS
– The annual review process for both public service broadcasters should take full account of capital expenditure projections, and ensure that spend is occurring in areas which provide the optimum return on investment;
– The annual review process should include an assessment of the methods employed by each broadcaster to ensure that they are incentivised with regard to cost control and maximising productivity;
– The annual review process should be incorporated into the five-yearly review process, to ensure alignment of strategy statements and costed plans. There should also be a clear link between the Public Service Statement of each PSB and the five-year strategic plans;
– The annual review process should:
- Focus on a manageable number of key commitments, as set out in the five year plan;
- Report performance each year on a consistent basis against a tightly defined number of key quantifiable performance indicators;
- Track outcomes;
- Report progress against any statutory obligations;
- Report against the key transparency and fair-trading requirements to address any over-compensation concerns;
– A core set of agreed audience and financial data should be established, and the data gathered and made available in advance of the commencement of each review.
FIVE-YEAR FUNDING REVIEW PROCESS
The five-yearly reviews should:
– Review the PSBs’ strategic plans in terms of their consistency with agreed remits and the extent to which they properly address audience, market and technology challenges;
– Assess the adequacy of funding available to deliver those plans, in the light of commercial income potential, cost expectations and any efficiency savings;
– Advise on public funding levels for the period of the plan;
– Agree the service mix and medium-term performance goals, including the broad remit of each main service, against which performance can be assessed over the coming years;
– Establish the key accounting processes, and reporting measures, which PSBs must implement to demonstrate compliance with EC guidelines on transparency and over-compensation, as well as meeting domestic expectations on fair conduct in commercial markets.