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Minister for Communications Denis Naughten TD ‘Public Service Broadcasting and Social Media Regulation’ Speech at Seanad Éireann 19 April 2018

Check Against Delivery

I thank the Seanad for the invitation to discuss a number of topics relating to public service broadcasting and social media regulation. The issues raised include Public Service Broadcasting in general, RTÉ's Strategy Plan, RTÉ advertising, Licence fee income, the sale of RTÉ State Assets and the Regulation of Social Media.

 

The opportunity to discuss our views on these issues is both timely and welcome. Senators will be aware the Joint Oireachtas Committee on Communications, Climate Action and Environment recently considered the future funding of our public service media and launched their report in November. The recommendations made in this report are an important input into the deliberations by myself and my Department on future funding.

 

I also hosted a very interesting and successful Open Policy Debate on online safety in March of this year and I am looking forward to hearing your views on these important issues today.

Public Service Broadcasting

Firstly, public service broadcasting is provided for in Part 7 of the Broadcasting Act, 2009.  The Act sets out the principal objects of the public service broadcasting corporations, RTÉ and TG4 and provides the companies' statutory obligations. They include the specific objective of providing national, free-to-air public service broadcasting services.

They also include provision of a broad range of other additional services that are seen as fundamental to the role of the public service broadcaster. The Act subjects the public service broadcasting corporations to a range of additional requirements in their pursuit of these objects.

Public service broadcasters play an important part in our democratic society. Their role is more important than ever in a world of 'fake news', where having credible, Irish sources of news and factual information is vital in protecting our democratic values and national perspective. I believe that Irish audiences value our public service broadcasters in this regard.

Survey results in Reuters Digital News Report 2017, show that 66% of respondents used RTÉ as their main source of news. This is significantly higher than the international average of 49%. For example, at the peak of Storm Emma, 950,000 people tuned in to watch RTÉ's Six One News.

It's not only news and current affairs that are critical elements of public service broadcasting. With the increased availability of international channels available and the advent of online content providers such as Netflix and Amazon, it is more important than ever that we invest in Irish content. We need strong public service broadcasters that have the resources to produce and broadcast material that says something about who we are as a people and that helps sustain a distinctive national identity.

Public service broadcasters are important not just for raising the level of awareness on topical issues, but because they support a vibrant independent production sector in Ireland. In any given year, the majority of Irish television programming is made or commissioned by RTÉ. This ensures that Irish audiences have access to high quality Irish programming, and is also vital to sustain and grow Irish talent, on screen and in the independent production sector. 

Both RTÉ and TG4 support thousands of jobs across the Irish economy, not just those directly employed by the broadcasters. Both Public Service Broadcasters spend millions each year on independently produced programming which is significant in local economies.

RTÉ Advertising

Of course, all of this requires significant funding. RTÉ is dual funded through a proportion of television licence fee receipts and the commercial revenue it generates. TG4 is funded by way of a combination of direct exchequer grant, television licence fee receipts and commercial revenue.

As you are aware, public service broadcasting is in serious financial trouble. Substantial falls in commercial income and, advertising revenue and increases in TV licence fee evasion have all had a negative impact. For example, RTÉ earns €100m less now in commercial income than it did in 2008. TG4 has suffered cuts in its public funding levels and is facing a major challenge to increase its audience numbers and commercial revenue.

There are a number of reasons for this reduction. The impact of regionally targeted 'Opt-Out' advertising has had a serious negative effect. This is the practice whereby UK based broadcasters create a mirror version of their channels for broadcast into Ireland.

While the content is the same, the mirror channel contains advertising content directed at Irish viewers. These channels are created at a marginal cost and once this cost is met from advertising revenue, the channel makes a profit. This allows the channel to sell advertising at a reduced rate.

In 2016, 39 of the 48 channels selling advertising in Ireland were opt-out channels and it is estimated that this form of advertising takes between €40 and €50 million from advertising revenue in the Irish market each year.

 

The growth of online advertising is also having an impact on commercial revenues available to the Irish broadcasting sector. For example, the share of advertising spend in the digital sector has risen from 7% in 2007 to a current figure of 40%, representing an increase from €100m to €445m. Of this figure, Google and Facebook obtain 75% of spend in the digital sector.

One step I have taken to counter these issues is my intention to seek Cabinet approval to further amend the Broadcasting Act 2009 to remove the hourly limit on advertising for commercial radio stations. In conjunction with this and to ensure fairness across the market, I will also allow RTÉ greater flexibility in respect of its hourly limits on radio advertising. 

RTÉ Strategy

Both RTÉ and TG4 have prepared 5 Year Strategies for the period 2018-2022. These are currently being considered by the Broadcasting Authority of Ireland as part of their five year review of public funding and I expect their view on these documents shortly.

RTÉ has committed to focus more on digital platforms in the coming years. It is no secret that online streaming services have become more popular than traditional broadcasting for younger people.

 

Making  Irish made, quality content available online is an important strategy for ensuring that younger audiences will continue to watch and listen to RTÉ.

This work will be carried out by a new production unit called "Digital Lab" which will create online content, bite size video shorts, podcasts and digital series. This is the way forward and I believe RTÉ have recognised that times are changing and they are moving with the times.  

 

However, in order for RTÉ and TG4 to carry out the objectives required of them and remain relevant in an increasingly digital world, significant additional resources will be required in the years ahead.   This is something that my officials and I are examining at present.

Sale of RTÉ Assets

RTÉ concluded the sale of part of its Donnybrook site in July 2017, known as Project Montrose. As you will be aware, the gross proceeds from the sale of the Donnybrook lands were €107.5 million. However, there are considerable costs and related taxes which are required to be deducted from the gross proceeds in order to arrive at the net land sale gain.

 

RTÉ has informed the Department that the land sale will not solve ongoing operating challenges but the proceeds will likely be spent across three strands, namely, capital investment, organisational restructuring, and reducing borrowings.

The sale of these underutilised lands at Montrose is welcome and will provide RTÉ with an injection of capital funding to re-invest allowing for upgrades to technology and facilities, restructuring and reducing debt ensuring they can compete with international broadcasters and continue to deliver on their public service broadcasting remit.

 

Licence Fee Income

As you are aware, RTÉ is funded through a mix of licence fee and commercial revenue. In 2008, their total income was €440m, while today this stands at €340m. RTÉ returned an operating deficit in 2015 and 2016. There were further operating losses in 2017 and deficits are inevitable for the coming years. This is a scenario that cannot be allowed to continue.

The current TV Licence system faces a number of challenges, the current unacceptable levels of evasion being the most obvious.  While the rate has fallen from 15.3% at the end of 2013 to the current rate of 14.6%, it is still very high. 

The high level of evasion represents an annual loss of €40m to public service broadcasting. This affects both the public service broadcasters but also the independent sector. Reducing the evasion rate would provide a mechanism to support a vibrant broadcasting sector without imposing additional charges on the public. Ultimately, the public are the losers here as the lack of funding means that they are not getting the quality Irish content that they are entitled to- especially those who pay their licence fee.

While the current TV Licence fee model has provided a measure of stability to date, the rapid changes in technology altering the traditional way in which television is watched, together with economic pressures generally, means that a serious question mark exists over the ability of the current funding model to provide continued stable funding for public service media in the long term.

In addition to this review of Future Funding, I obtained Government approval to draft a number of legislative amendments to the Broadcasting Act 2009, including amendments for the tendering of TV licence fee collection.  Once this legislative amendment has been enacted, it will be possible to hold a public procurement competition to tender for a new collection agent.

I have also made a number of proposals which will assist the broadcasting sector once implemented. For example, the Broadcasting (Amendment) Bill, provides for the introduction of a new funding scheme to offer bursaries to journalists working in local or community radio stations. It also provides for  a reduction of the broadcasting levy which will alleviate the burden on broadcasters. This proposal will reduce the overall levy to be paid by the sector and would be applied evenly across all broadcasters with community broadcasters being completely exempt. The Committee issued their Pre-Legislative Scrutiny report on these proposals on March 8th. My officials are considering the contents of the report and it is also being considered by Parliamentary Counsel in the drafting process. 

Regulation of Social Media

The Leader has also asked me to refer to Online Safety, which is a complex area that straddles the responsibilities of many Government Departments. There are a wide range of initiatives underway by Government, by the European Commission, by NGOs, by industry and others, but as a Government we recognise that we must demonstrate and deliver a more joined-up approach to this subject for our citizens.

 

When we speak about Online Safety, we are seeking to address a wide spectrum of content and behaviour. At one end of this spectrum are the most heinous criminal acts, committed by criminals. At the other end, we find abusive or hurtful comments, which are posted by individual users, some of whom are children.

 

On 8 March 2018, I hosted an Open Policy Debate on the subject of Online Safety at the Royal Hospital Kilmainham, Dublin which was opened by An Taoiseach.

Over 120 representatives from a range of stakeholders participated, including NGOs, industry, parents' groups and young people. The event was supported by five other Ministers and organised in conjunction with the Department of Justice and Equality; Education and Skills; Health; Business Enterprise and Innovation; Children and Youth Affairs. A recording of the event is available to view on my Department's website.

 

In opening the event, An Taoiseach announced that it was the Government's intention to prepare, by June of this year, an action plan on online safety with an integrated set of measures which we will use to ensure we support online safety at all levels. My Department is actively contributing to the preparation of that plan, and a report on the Open Policy Debate will form one of the inputs to the plan.

 

The actions contained in this plan will be complementary to the initiatives being progressed by the European Commission, including the communication in relation to illegal content on Online Platforms, the revision of the Audiovisual Media Services Directive and the EU Safer Internet Programme. Ireland believes we are in much stronger position when we work with our European partners to agree a set of harmonised measures to address our common concerns.

 

I must also recognise the excellent work which the Joint Oireachtas Committee on Children and Youth Affairs has carried out since September 2017 in considering the subject of Online Safety. The committee held a series of meetings and heard from a number of academics, industry practitioners, young people themselves and Departmental officials. I must highlight one meeting in particular which was held on 21 February this year, when four senior Cabinet Ministers gave evidence to the Committee together, including myself.

 

I believe that that is unprecedented, and it is a clear sign of this Government's commitment to the subject of online safety. The Joint Oireachtas Committee's report and recommendations will also be considered by the relevant Government Departments in the preparation of the action plan.

 

Online Advertising and Social Media (Transparency) Bill

I should also mention in the context of social media regulation, the Online Advertising and Social Media (Transparency) Bill that Deputy James Lawless has brought forward. We are all aware that in various electoral processes around the world, social media has been misused to seek to manipulate public opinion through targeted advertising.

 

During the Second Stage debate on the Bill, I acknowledged that Deputy Lawless has identified a very important issue which goes to the heart of our democratic processes.

However, as currently drafted, the Bill has some significant flaws that could give rise to a number of unintended consequences. For example, the legislation fails to recognise the role that should be played by the Standards in Public Office Commission in the regulation of such matters. Its definitions are drawn too broadly and it could potentially lead to restrictions on the advertising of matters that are clearly not in scope, for example, constituency clinics. 

 

We need to ensure in relation to all online regulation that we strike an appropriate balance between free speech and clear and proportionate regulation, and that we draw on relevant national and international expertise in this matter. With this in mind, the Government has established an interdepartmental group to consider the issues arising from recent experiences in other democratic countries with regard to the use of social media by external, anonymous or hidden third parties.

 

It will focus on the risks arising from disinformation spread by social media and other means, particularly in respect of safeguarding the integrity of electoral processes. My Department is represented on that group which is chaired by the Department of the Taoiseach.

 

We are faced with the reality that the speed of innovation in media generally, and online media in particular, poses real challenges for legislators world-wide. We need to ensure that public service broadcasters and traditional media continue to thrive, and that there is an effective but proportionate regulatory regime of the online world that allows for innovation and freedom of expression while protecting citizens and young people.

I would be happy to hear your views and questions on these important matters.

Thank you.

ENDS

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