RT PRE SE NT AT ION T O T HE JOINT OIRE ACHT AS COMMIT - - PDF document

RT É PRE SE NT AT ION T O T HE JOINT OIRE ACHT AS COMMIT T E E ON COMMUNICAT IONS, E NE RGY & NAT URAL RE SOURCE S We dne sda y De c e mbe r 15, 2010

INT RODUCT ION

T ha nk yo u fo r the o ppo rtunity to pre se nt to yo u to da y. My na me is Co no r Ha ye s a nd I a m the Chie f F ina nc ia l Offic e r o f RT É . I n a dditio n to my ro le a s CF O, I a lso ha ve E xe c utive re spo nsibility fo r a numb e r

• f RT

É ’ s I nte g ra te d Busine ss Divisio ns, inc luding RT É Pub lishing – whic h c a rrie s

• ut a ll o f RT

É ’ s dig ita l me dia a c tivitie s. At yo ur re q ue st, we will disc uss the issue o f fa ir c o mpe titio n in Pub lic Se rvic e Bro a dc a sting with pa rtic ula r re fe re nc e to dig ita l me dia . Jo ining me to da y fro m RT É Pub lishing a re :

• Múirne L

a ffa n, E xe c utive Dire c to r - re spo nsib le fo r the stra te g y a nd

• pe ra tio ns o f RT

É ’ s we b se rvic e s;

• Aisling Mc Ca b e , Dire c to r o f Pla tfo rm De ve lo pme nt - re spo nsib le fo r

pro duc tio n o f dig ita l c o nte nt &

• E

le a no r Ble a he ne , So lic ito r, RT É : spe c ia list in b ro a dc a sting la w a nd re g ula tio n. We a re c o nsc io us tha t in its re c e nt pre se nta tio n to the Co mmitte e , the Na tio na l Ne wspa pe rs o f I re la nd (NNI ) lo b b y g ro up ma de two ke y a sse rtio ns a b o ut RT É a nd its o nline a c tivitie s whic h c a n b e b ro a dly summa rise d a s fo llo ws:

• 1. T

ha t RT É tra de s unfa irly, using its lic e nc e fe e a dva nta g e , a nd a s a re sult, a c ts in a n a nti-c o mpe titive ma nne r;

• 2. T

ha t RT É 's a nti-c o mpe titive b e ha vio ur is pre ve nting the British a nd I rish ne wspa pe r title s, re pre se nte d b y NNI , fro m b e ing a b le to c o mpe te in the e me rg ing dig ita l e nviro nme nt, a nd thus pre ve nts the m fro m a c c e ssing a fa ir sha re o f the I rish o nline a dve rtising ma rke t. Ac c o rding ly a t the o utse t I think it is impo rta nt to c la rify tha t:

• RT

É .ie is a public se rvic e , a c ting within RT

É ’ s Pub lic Se rvic e Bro a dc a sting re mit a s se t o ut the in the Bro a dc a sting Ac t 2009 a nd in c o mplia nc e with a pplic a b le E U re g ula tio ns;

• RT

É .ie is not a c omme rc ia l we bsite , a ltho ug h it is funde d b y RT

É ’ s c o mme rc ia l a c tivity; 1

• RT

É .ie a c ts fa irly, c ompe titive ly a nd tra nspa re ntly in its c o mme rc ia l

a c tivitie s;

• RT

É is fully c omplia nt with the re q uire me nts o f se c tio ns 108 a nd 109

• f the Broa dc a sting Ac t 2009.

PACE OF DIGIT AL T E CHNOL OGY

Pub lic Se rvic e Bro a dc a ste rs a ll o ve r E uro pe , a re e no rmo usly a ffe c te d b y the te c hno lo g ic a l de ve lo pme nts tha t ha ve le d to the e me rg e nc e o f the inte rne t a nd the dig ita l wo rld. E q ua lly E uro pe a n Pub lic Se rvic e Bro a dc a ste rs a re ma nda te d to e mb ra c e this ne w te c hno lo g y a nd to re spo nd to the se c ha ng e s b y de live ring c o nte nt a nd se rvic e s o n dig ita l pla tfo rms. I n this c o nte xt, Pub lic Se rvic e Bro a dc a ste rs a re a lso re q uire d to b e inc re a sing ly inno va tive in re la tio n to the de ve lo pme nt o f ne w fo rms o f fina nc ing to e na b le the m to pro vide the se dig ita l se rvic e s. All o f RT É 's o nline a c tivitie s c o mply with its pub lic se rvic e re mit. RT É 's ro le is no t just to info rm a nd e duc a te b ut it is a lso to e nte rta in a nd to e nsure tha t it ha s re le va nc e to a ll se c tio ns o f the po pula tio n. I t ha s lo ng b e e n re c o g nise d b y the E U tha t the sc he dule o f a pub lic se rvic e b ro a dc a ste r ne e ds to b e va rie d a nd mixe d a nd ha ve a b ro a d de mo g ra phic a ppe a l. T his princ iple is e q ua lly re le va nt in a n o nline c o nte xt. Simila r to Pub lic Se rvic e Bro a dc a ste rs, Ne wspa pe rs wo rldwide ha ve b e e n impa c te d b y lo ng -te rm struc tura l c ha ng e in the ir industry, b y a udie nc e fra g me nta tio n a rising fro m the e me rg e nc e o f dive rg e nt se rvic e s a nd b y the e c o no mic turb ule nc e o f re c e nt ye a rs. T he se c ha lle ng e s c le a rly a re a lso a ffe c ting the British a nd I rish ne wspa pe r title s so ld in I re la nd.

T he shift to dig ita l a dve rtising is a n inte rna tiona l ra the r tha n a n Irish phe nome non. Adve rtise rs a re fo llo wing a udie nc e s a nd a re inc re a sing ly

switc hing so me e le me nts o f me dia b udg e ts a wa y fro m tra ditio na l a ve nue s to wa rds the e me rg ing a lte rna tive s inc luding o nline me dia . T he NNI , in simple te rms is se e king fo r RT É ’ s c o mme rc ia l a c tivitie s o r its o nline a c tivity, o r b o th, to b e c urta ile d to the b e ne fit o f NNI ’ s British a nd I rish ne wspa pe r title s. RT É b e lie ve tha t a ny suc h a c tio n in itse lf wo uld b e unfa ir a nd a nti-c o mpe titive , a nd wo uld b e a g a inst the I rish pub lic inte re st. Simply put, the

c omme rc ia l c ha lle ng e s fa c e d by the British a nd Irish ne wspa pe r industry ha ve not be e n c a use d by RT É ’s online a c tivitie s.

T he se rvic e s we pro vide o nline to the I rish pub lic a re se rvic e s the y wa nt a nd a nything le ss wo uld sig nific a ntly hinde r RT É ’ s a b ility to fulfil o ur ro le a s a Pub lic Se rvic e Bro a dc a ste r. 2

RT É .ie – A PUBL IC SE RVICE

Unde r RT É ’ s pub lic se rvic e re mit, RT

É must ma inta in a we bsite a nd de ve lo p a nd

pro g re ss o ur o nline pre se nc e in re spo nse to e me rg ing tre nds. I n 1996 RT É .ie wa s first la unc he d. F

• llo wing a re -o rg a nisa tio n o f RT

É in 2002 / 2003, we ha ve pro g re ssive ly so ug ht to e mb ra c e the o ppo rtunitie s o ffe re d b y dig ita l te c hno lo g ie s fo r the b e ne fit o f the wide r pub lic . RT É .ie o ffe rs ne ws, b usine ss, spo rt, e nte rta inme nt a nd life style , in a dditio n to se rvic e s suc h a s the RT É pla ye r, Ne ws No w a nd Ae rte l o nline . RT É ’ s o nline sc he dule s fulfil o ne o r b o th o f the two o b je c tive s, na me ly: ‐ RT É ’ s pub lic se rvic e c o mmitme nts a s se t o ut in the Bro a dc a sting Ac t 2009 & ‐ I ts ma nda te to pursue c o mme rc ia l o ppo rtunitie s RT É no t o nly a da pts a nd re -purpo se s T e le visio n a nd Ra dio c o nte nt fo r rte .ie , b ut it a lso c re a te s o rig ina l c o nte nt fo r o nline . I n do ing so we ha ve fulfille d the pub lic se rvic e re mit b y de live ring c o nte nt to a udie nc e s, b o th in I re la nd a nd inte rna tio na lly, whe n the y wa nt it a nd whe re the y wa nt it. T

• illustra te this po int - a g o o d e xa mple is ho w we c o mmunic a te d a c ro ss a ll

dig ita l pla tfo rms during the la st fe w we e ks o f e xtre me we a the r c o nditio ns. T he RT É .ie ne ws te a m pro duc e d live te xt upda te s fo r c o nsumptio n o nline , o n mo bile , a nd o n te le te xt e a c h da y fro m 6a m until 11pm. I n o rde r to de live r o ur o nline se rvic e , RT É .ie e mplo ys o ve r 70 pe o ple , inc luding jo urna lists, multime dia pro duc e rs, we b de sig ne rs a nd te c hno lo g ists who to g e the r:

• Orig ina te a nd pro duc e ne w c o nte nt;
• Ada pt a nd re -purpo se T

e le visio n a nd Ra dio ma te ria l;

• Distribute c o nte nt to o ur a udie nc e s, o n a multiplic ity o f de vic e s inc luding

de skto p PCs, ipho ne s, la pto ps, mo b ile pho ne s a nd ipa ds.

BROADCAST ING ACT , 2009

RT É ’ s pub lic se rvic e re mit is de fine d in spe c ific te rms in Se c tio n 114 o f the Bro a dc a sting Ac t 2009. I t is a lso re c o g nise d b y the E uro pe a n Co mmissio n in its 2009 Bro a dc a sting Co mmunic a tio n whic h a lso re fe rs to , a nd a c kno wle dg e s, the ne e d fo r “dive rsific atio n o f public se rvic e se rvic e s” whic h g o e s b e yo nd 3

b ro a dc a sting in the tra ditio na l se nse to inc lude se rvic e s suc h a s a udio / visua l c o nte nt a nd o nline te xt info rma tio n se rvic e s. I n a dditio n, the Co mmissio n ha s re c o g nise d tha t pub lic se rvic e b ro a dc a ste rs sho uld b e b o th e nc o ura g e d a nd c a pa b le o f ta king a dva nta g e o f de ve lo pme nts in dig ita l me dia a nd ne w distrib utio n pla tfo rms to de live r se rvic e s to the ir a udie nc e s. I t a lso re fe rs to the b usine ss mo de ls o f pub lic se rvic e b ro a dc a ste rs g e ne ra ting ne w so urc e s o f fina nc ing suc h a s o nline a dve rtising . I n e sse nc e , E uro pe a n po lic y, whic h info rme d I re la nds o wn re c e nt b ro a dc a sting le g isla tio n in 2009, ma nda te s tha t pub lic se rvic e b ro a dc a ste rs must b e fully a c tive o nline a nd in the a re a o f dig ita l me dia . Co nsiste nt with E uro pe a n po lic y, RT É ’ s re mit is the re fo re to b e fully e ng a g e d in the pro visio n o f T e le visio n, Ra dio a nd Online Sc he dule s fina nc e d b y a dua l-funding mo de l tha t e na b le s, a nd q uite se nsib ly re q uire s, RT É to pursue c o mme rc ia l o ppo rtunitie s in

• rde r to limit the pub lic c o st.

CODE S OF PRACT ICE

RT É .ie b e ha ve s re spo nsib ly in its a dve rtising a c tivitie s, a nd o pe ra te s within stric t a dve rtising c o de s. As we ll a s a dhe ring to vo lunta ry re g ula tio n unde r the ASAI , RT É .ie a lso c o mplie s with the Alc o ho l Ma rke ting Co mmunic a tio ns Mo nito ring Bo dy. RT É .ie a lso a pplie s mo re string e nt rule s tha n the BAI Childre n’ s Co mme rc ia l Co mmunic a tio ns Co de , in tha t RT É .ie c a rrie s no a dve rtising o n c hildre n’ s site s. T he re c e nt Audio Visua l Me dia Se rvic e s Dire c tive puts a dve rtising re stric tio ns o n RT É .ie b ut no t o n ne wspa pe r site s.

F UNDING OF RT E .ie

T he c o sts o f RT É .ie , b o th in re -purpo sing c o nte nt fo r dig ita l use a nd in c o nte nt

• rig ina tio n, a re pa rtia lly me t by c o mme rc ia l a c tivitie s o n the we b site itse lf:

a dve rtising , spo nso rship, a ffilia tio ns a nd e -c o mme rc e . T he re ma inde r o f the c o st o f pro viding the o nline se rvic e is me t b y the pro c e e ds fro m o the r c o mme rc ia l a c tivitie s in RT É Pub lishing (RT É Guide , Ae rte l a nd T e le c o ms) to g e the r with so me suppo rt fro m RT É ’ s wide r c o mme rc ia l a c tivitie s o utside o f RT É Pub lishing . T his fra me wo rk, whic h ha s b e e n a ppro ve d a nd suppo rte d b y the E uro pe a n Co mmissio n, me a ns tha t RT

É is ma nda te d to pursue c omme rc ia l opportunitie s

to e na b le it to e a rn the ne c e ssa ry c o mme rc ia l re ve nue to ma ke up the sig nific a nt sho rtfa ll in T V lic e nc e fe e funding tha t e xists. 4

I n this re g a rd I wo uld like to po int o ut tha t the T V lic e nc e fe e c o ve rs a ppro xima te ly ha lf o f the c o st o f RT É ’ s pub lic se rvic e a c tivitie s a nd do e s no t, a nd c ould not, e ve n re mote ly c o ve r the full c o st o f a ll o f the RT É pub lic se rvic e c o mmitme nts whic h a re sta tuto rily re q uire d o f RT É . He nc e the c ritic a l ne e d, a nd le g itima te o b lig a tio n fo r RT É to g e ne ra te the re ma inde r o f its a nnua l b udg e t re q uire me nts fro m its c o mme rc ia l a c tivitie s. T

• da te RT

É Pub lishing ha s no t b e e n fina nc e d b y the T V lic e nc e fe e .

ONL INE MARKE T RE VE NUE S

Co ntra ry to wha t ha s b e e n sug g e ste d b y NNI , RT

É is not a domina nt nor the la rg e st pla ye r in the o nline re ve nue a nd a dve rtising ma rke t in I

re la nd. I n fa c t, o f a re po rte d to ta l I rish o n-line a dve rtising spe nd o f €97 million in 2009, a s e stima te d in the I AB Adspe nd Study o f April 2010, RT É ’ s sha re wa s just €2½

million o r le ss tha n 3% o f the ma rke t. T

he RT É fig ure is spe c ific a lly disc lo se d in

• ur a nnua l re po rt sho uld yo u wish to c he c k the fig ure s fo r yo urse lf.

T he a sse rtio n ma de b y NNI is the re fo re ma nife stly wro ng .

COMPL IANT F INANCIAL RE PORT ING

RT É wishe s to e mpha sise tha t it ha s a lwa ys fully c o mplie d with the pro visio ns o f E U a nd na tio na l c o mpe titio n la w in the c o nduc t o f its c o mme rc ia l a c tivitie s. T ho se pro visio ns pro hibit a ny disto rtio ns o f the ma rke t b y a ny unfa ir use o f T V lic e nc e fe e re ve nue . And the sa me pro visio ns a lso re q uire a ne c e ssa ry de g re e

• f tra nspa re nc y in te rms o f its a c c o unting whic h RT

É is stro ng ly c o mmitte d to . RT É ’ s c o mmitme nt to hig h sta nda rds o f fina nc ia l re po rting ha ve b e e n e xplic itly re c o g nise d e xte rna lly a t a pro fe ssio na l le ve l na tio na lly in I re la nd. F

• r e a c h o f the pa st 6 ye a rs sinc e 2004, RT

É ’ s Gro up Annua l Re po rt ha s b e e n sho rt-liste d in the Pub lishe d Ac c o unts Awa rds (he ld unde r the a uspic e s o f the I nstitute o f Cha rte re d Ac c o unta nts – L e inste r) in the c a te g o ry fo r L a rg e Unq uo te d Co mpa nie s a nd in b o th 2008 a nd 2009 RT É ’ s Gro up Annua l Re po rts ha ve wo n the re le va nt c a te g o ry a wa rd.

COMPE T IT IVE L ANDSCAPE

I n re a lity the stro ng e st c o mpe titio n to I rish ne wspa pe rs g e ne ra lly, o r mo re spe c ific a lly in re spe c t o f Online a c tivitie s, a re no t I rish b ro a dc a ste rs suc h a s RT É , b ut ra the r is a po we rful c o mb ina tio n o f g lo b a l a nd na tio na l fo rc e s: 5

• Wo rldwide I

nte rne t c o mpa nie s (inc luding Se a rc h, Displa y a nd Cla ssifie d) whic h ha ve a sig nific a nt pre se nc e in the I rish ma rke t E g . Goog le ,

F a c e book, Mic rosoft, Ya hoo;

• Spe c ific inte rna tio na l dig ita l a dve rtising ne two rks: - T

ra de Double r , Va lue Clic k Me dia , AOL Adve rtising ;

• Multi-Me dia Pla tfo rm & Co nte nt Distrib uto rs; E

g . SKY, UPC

• I

rish b a se d I nte rne t-o nly o ffe ring s whic h ha ve e sta b lishe d stro ng po sitio ns in the c la ssifie d a dve rtising ma rke ts, e .g ., DAF

T .ie , Ca rzone .ie , Prope rty.ie , MyHome .ie , IrishJobs.ie ;

I n this re g a rd RT É sha re s simila r c ha lle ng e s to the Ne wspa pe r title s . F

• r its pa rt,

in re spo nse to the se c ha lle ng e s a nd o ppo rtunitie s RT É ha s re spo nde d b y se e king to dive rsify its c o mme rc ia l re ve nue stre a ms with a vie w to e nsuring tha t we a re in the b e st po sitio n to de live r a hig h q ua lity se rvic e o n a ll o f o ur pla tfo rms inc luding o ur o nline pla tfo rm I t is a lso impo rta nt to put a n a ppro pria te a nd b ro a de r industry c o nte xt o n this subje c t. Ba se d o n pub lishe d info rma tio n, the c o mb ine d g lo ba l turno ve r o f the “T

• p 15” T

ra ditiona l Me dia o rg a nisa tio ns (ra nke d b y turno ve r) se lling /

distrib uting a dve rtising / c o nte nt se rvic e s into the I rish Ma rke t in 2009 a mo unte d to €43 Billion. A c o py o f this listing is a tta c he d.. T he la rg e sc a le a nd inte rna tio na l influe nc e a nd re a c h o f so me o f the se

• rg a nisa tio ns is pe rha ps we ll re fle c te d b y the fa c t tha t the g lo b a l c o mbine d

turno ve r o f the “T

• p 5” a mo unts to so me €40 Billion in 2009 whe re a s the Gro ss

Na tio na l Pro duc t o f the e ntire Irish E

c onomy fo r 2009 wa s €131 Billion (F

• re c a st

2010 €126 Billio n). I n re duc ing o rde r o f size , the five la rg e st g lo b a l T

ra ditiona l Me dia pla ye rs (with

a c o mbine d g lo b a l turno ve r in 2009 o f €40 billio n) who ha ve a pre se nc e se lling / distributing a dve rtising / c o nte nt se rvic e s in the I rish ma rke t a re :

• 1. Ne ws Corpora tion Inc (USA);
• 2. L

ibe rty Globa l Inc (USA);

• 3. British SKYBroa dc a sting Group plc . (UK);
• 4. Da ily Ma il & Ge ne ra l T

rust plc . (UK) &

• 5. Inde pe nde nt Ne ws & Me dia plc . (Ire la nd).

I t is a lso wo rthy o f no te tha t ne wspa pe r title s o wne d b y thre e o f the se “T

• p 5”

c o mpa nie s a re re pre se nte d b y NNI lo b b y g ro up. T his inc lude s I nde pe nde nt Ne ws & Me dia plc ., whic h is the o nly I rish e ntity in the “T

• p 5” g ro uping a nd

whic h in 2009 ha d a T urno ve r o f €1.3 Billion o r o ve r 3 time s tha t o f RT É . Out o f the “T

• p 15” T

ra ditiona l Me dia c o mpa nie s liste d, the c o mbine d g lo b a l

turno ve r in 2009 o f tho se c o mpa nie s who o wn British o r I rish ne wspa pe r title s 6

re pre se nte d b y NNI a mo unts to c irc a €27 Billion. Ple a se no te tha t ma ny o f the se multi-na tio na l c o mpa nie s do no t spe c ific a lly disc lo se the to ta lity o f the ir sub sta ntia l turno ve r a nd fina nc ia l sc a le in the I rish me dia ma rke t. By c o ntra st the e ntire turno ve r o f the RT

É Group for 2009 wa s o nly €375 Million

pla c ing RT É in 9th po sitio n in te rms o f size b y turno ve r. As sta te d a lre a dy a b o ve RT É ’ s Online T urno ve r in 2009 wa s just €2½ Million. Co nstra ining RT É ’ s o nline a c tivitie s c le a rly will no t so lve the fina nc ia l pro b le ms tha t ma y b e fa c e d b y the sha re ho lde rs o f the va rio us g lo b a l a nd na tio na l tra ditio na l me dia g ro ups who o wn the va rio us British a nd I rish ne wspa pe r title s re pre se nte d b y NNI . Ra the r, suc h a me a sure me re ly se rve s to de fle c t a tte ntio n a wa y fro m the turb ule nt ma c ro -e c o no mic c lima te we a ll no w live in a nd fro m the spe c ific ma na g e me nt c ha lle ng e s tha t individua l ne wspa pe r’ s must de a l with. I t wo uld c e rta inly a lso de prive the I rish pub lic o f vita l ne ws, info rma tio n a nd o the r pub lic se rvic e c o nte nt a nd sc he dule s c urre ntly pro vide d b y RT É .ie .

CONCL USION

Within the limits o f its re so urc e s, RT E fo r its pa rt ha s prude ntly soug ht to be c ost-

e ffe c tive , innova tive , pro- a c tive , fa st- moving a nd dyna mic in re spo nse to the

te c hno lo g ic a l c ha lle ng e s a nd o ppo rtunitie s b ro ug ht a b o ut b y a ra pidly c ha ng ing a nd inc re a sing ly fra g me nte d me dia la ndsc a pe . RT É pursue s c o mme rc ia l a c tivitie s Online a nd do e s so in a fa ir a nd tra nspa re nt ma nne r tha t c o mplie s with a ll re le va nt c o de s a nd pra c tic e s. RT É .ie do e s no t use T V L ic e nc e F e e mo ne y. I t is e sse ntia l fo r RT É to drive re ve nue fro m o the r so urc e s a nd to a c t c o mme rc ia lly so tha t it c a n fulfil its pub lic se rvic e re mit. T he I rish Online a dve rtising ma rke t is to ug h, c o mpe titive a nd is he a vily po pula te d with ve ry stro ng g lo b a l c o mpe tito rs.

“Ne w” me dia is no long e r “Ne w”, it is he re to sta y – the c loc k simply c a n’t be turne d ba c k.

T ha nk yo u fo r yo ur a tte ntio n. Co no r Ha ye s Chie f F ina nc ia l Offic e r, RT É 7