RTÉ Under The Spotlight: Is The Licence Fee On The Way Out?

Taoiseach Leo Varadkar recently reiterated his commitment to reforming the TV license process, during his term in office. His remarks came last month, after several weeks of controversy surrounding RTÉ's financial dealings, including undisclosed payments to Ryan Tubridy.

Executives from the RTÉ board were called to testify before two separate Oireachtas committees, during June and July. As revelation followed revelation, calls for reform grew, from both citizens and elected officials – and even members of the RTÉ board.

But what is really at stake here? This is not the first government to attempt to reform what is now an archaic system. There was, for example, a proposal by the 2011-2016 government to replace the licence fee with a Public Service Broadcasting charge, which would be levied on all primary residences and some businesses. The government published a public consultation document on the plan in 2013.

However, in 2014 – amid increasing political turmoil – the government announced that it would need more time to consider the plans for reform, and postponed the changes to 2015. In the end, whatever changes were being contemplated were quietly dropped.

In 2019 it was promised that a broadcasting charge would be implemented by 2024, with interim funding being put in place while details were established. But what would the broadcasting charge benefit? How would the money generated be distributed? None of these questions had been clarified.

Hence the decision to establish the Future of Media Commission – at the top of whose remit was to decide how the concept of public service media could be supported and protected in a world where an increasing proportion of advertising revenue was being hoovered up by social media companies and tech giants.

In 2022, the government released the Future of Media Commission Report. The report was produced following an extensive consultation with experts, stakeholders, and members of the public. However, its publication did not generate much excitement. In all, the report made 50 recommendations, 49 of which were accepted. The one holdout? Bizarrely, the recommendation to reform the TV Licence fee was effectively put on hold.

So what had the Commission said exactly on this theme? They had recommended that the licence fee be phased out and replaced with direct funding from the exchequer. Which, of course, could turn the whole thing into a hot political potato. The government rejected this recommendation, but acknowledged that reforms were needed.

The result was that an agreement was reached for interim additional funding, to take those in need of additional funds – aka RTÉ – through the end of 2023, with a new system to be put into effect by 2024. As this deadline comes closer, the commission and the current administration – not helped, it has to be said, by the controversies that have erupted in RTÉ – do not appear to be any closer to finding a solution.

RTE's FAIR SHARE

The most common common criticism of Ireland's current system is that almost all of the funding goes to RTÉ, despite the fact that there's a wide variety of independent broadcasters operating in Ireland in radio and television. Currently, funds from the licence fee are divided along the following lines: An Post, who collect the licence fee on behalf of the Government, receive a commission to cover its costs; a small amount went to the Broadcasting Authority of Ireland (which now goes to Coimisiún na Meán); and TG4 receives indirect funding, via RTÉ, as RTÉ are mandated to provide 365 hours of programming every year to TG4, free of charge.

The reason RTÉ receives such a large share of the funding is down to how the licensing system developed in the first place. The TV license fee is the direct descendent of the radio license fee, first introduced in the UK and Ireland in 1924, and designed as an independent means of supporting the State broadcaster – the only ones operational at the time – and eliminating the risk of political interference involved in relying on general taxation as the source of funding.

However, what was fit for purpose when the only way to access programming was through a device shared by a family like radio or television, and the only source of programming was a State broadcaster, clearly is not so now.

In today's media landscape, people can access public service broadcasts and commercial programming alike online through phones and laptops, through a radio in the car or in the home, or through a television. People are also no longer totally reliant on the BBC or RTÉ for their education, entertainment and enlightenment.

Equally, where content is concerned, a myriad of other organisations – across all forms of media, including newspapers and magazines in print and online – are producing important forms of public service journalism, writing and programming.

To put it differently, public broadcasters like RTÉ are in competition with private sector and independent media of every kind. Competitors have argued persuasively in the past that RTÉ have used their State funding to outbid competitors in contracts for sporting rights, blockbuster series or even star presenters.

On the flip-side, RTÉ not only denies this, but argues they have been forced to rely increasingly on advertising and sponsorship revenue as the license fee has not increased since 2008. With inflation on the rise, RTÉ's funding from the State has effectively been decreasing for the past 15 years.

DEFINING THE ISSUE

So where does that leave us? When he took up the position in July, the incoming Director General of RTÉ, Kevin Bakhurst, called for an overhaul of the TV licence system, repeating a demand made by the now former Director of Strategy, Rory Coveney in an Oireachtas appearance last year.

Between RTÉ, the Government and independent experts there seems to be tacit agreement that the TV licence fee is unpopular, outdated, and inefficient. When you can watch TV stations on a laptop, or a phone, why base payment on the specific device that is a television set?

There has been some attempt at bridging that gap. Currently, any home or business with a traditional television – or any device that could potentially decode TV signals, including some laptops – must pay a fee of €160 per year. But what if you never want to watch RTÉ, just some subscription channels, for which you are paying anyway? Why should you be charged any fee at all?

The bottom line seems to be that, in a world where an ever-growing variety of content is available on multiple devices large and small, tying collection to technology access of a certain kind is no longer an accurate or fair way to determine who is benefiting from public broadcasters' content and how the cost should be covered.

But there is a flip-side to that argument too. As on-demand and streaming services have grown in popularity, advertising revenue for traditional media outlets has decreased and the number of households with a traditional television has shrunk. If we want great public service programming, the money has to come from somewhere.

Rory Coveney told the Oireachtas, in a 2022 hearing, that the number of households without a TV has grown from 3% in the mid-2010s to 16.5% in 2022.

The overall compliance rate of 85% before the recent RTÉ controversy already put Ireland at a low compliance rate compared to other European countries. To make one relevant (if non-EU comparison), even after the UK eliminated free licences for over 75s, in 2020, their evasion rate rose from 7.58% to just 8.93%, far below Ireland's pre-scandal 15%.

PUBLIC MEDIA TAX

Some people believe that the evasion rate is so high in Ireland because of how collection is run. The current system sees An Post responsible for household inspections, collection of fees, and initiating prosecution against those who fail to pay. In exchange, it receives a commission from licence fee revenue to cover these costs.

An Post's database of television owners is over 30 years old and not compatible with Eircode, meaning data analysis is very difficult. A government report in 2017 recommended collection be transferred to the revenue commissioners during the interim period of 2020-2024. This would certainly make the system more effective.

However, the current administration appears to be at an impasse on implementing reforms. A number of alternatives have been proposed and rejected since talks on reforms got going in earnest over 10 years ago. As indicated, the latest report from the Future of Media Commission, published July of 2022, recommends replacing the licence fee with direct funding from the exchequer, sometimes referred to as a broadcasting fee or "public media tax."

This would apply to all households and some businesses, regardless of which devices people have in their homes. Advocates claim this is a more equitable way to collect revenue, as people consume RTÉ content – and lots more public service media besides – in a number of ways aside from radio and TV.

This plan was rejected by the current administration, which has yet to propose an alternative plan of action. And that was before the vastly complicating matter of the apparently exorbitant salaries paid to people in RTÉ came to light.

Meanwhile, countries across Europe have been reforming their TV licenses for the past two decades, replacing either the method of collection or the licence fee altogether.

The UK recently tied its fee to the inflation rate and extended it to cover the BBC iPlayer streaming service, as well as its traditional TV and radio platforms, which significantly increased revenue.

Italy and Romania both transferred collection of the fee to utility suppliers, resulting in significant drop in evasion. Romania eventually replaced its fee with a dual model of state grants and advertising in 2017.

Australia was the first to adopt this model in 1974, and the Netherlands and Denmark followed suit in 2000 and 2022 respectively.

Finland axed its license fee ten years ago, which it replaced with a public broadcasting tax. Belgium, Sweden, Norway and Iceland all fund their public broadcasters through a type of tax.

In France, Bulgaria, and Hungary, funding comes directly from the State budget or treasury. The licence fee still exists in name in Hungary, but residential fees have been paid from the state budget since 2002. Needless to say, their model is one that we might wisely run a mile from.

Denmark, France, Norway, Sweden, Switzerland, and Italy have all made major changes to their broadcasting funding models since 2019. Will Ireland be next? I wouldn't be the house that I don't have on it...