Good morning.
I am delighted to have been asked by the IBI to open this morning’s event on the future of radio in Ireland. Equally, I am glad to see that the industry is engaging with the concept of the future of media in an open minded and constructive manner, and looking across the media industry for inspiration and lessons.
Even in ordinary times, this would be wise. But the times we are living through are not normal. The media sector in Ireland is in the midst of a period of profound, even destructive change. There is more to this tale than the sad but ultimately simple story of the economic decline though, or even the obvious rise of online advertising. Rather we are living through something akin to the perfect storm, where a series of factors are combining to re-form and re-shape the Irish media landscape entirely. And like structural change everywhere, it is seldom an entirely pleasant process for those involved.
In and of itself, the boom and crash cycle has been terribly destructive for media; the property bubble drove advertising revenues to new and unforeseen heights and led to the over-valuation of many media assets in Ireland, and insulated companies from some deeper structural shifts that were going on elsewhere. When the veil fell, Irish media had further to fall, having to deal with the combined forces of a recession and several years of pent up structural change.
These structural changes include the rise of online media and advertising, now worth more than €150m and growing at more than 12% per annum, a fall in newspaper circulation and, critically, the general penetration of the Irish market by content and operators from other jurisdictions.
These developments have had had their effect across media in Ireland, as major advertisers have brought their marketing effort in house, and, in many cases, pulled them out of Ireland entirely. In turn, the number of advertising agencies has fallen, giving the remaining players more market power. Moreover, price is now the key metric for advertisers – impacts per euro.
No one has been immune from this. In television, RTÉ have seen major falls in revenue, both due to the collapse in advertising and to the top-slicing of the licence fee. In turn, management have taken in excess of €100m in costs out of the organisation, and have reduced the workforce by over 400 staff. TV3 remain an important part of the broadcasting landscape also with the aid of an increase in advertising minutage in 2010, and have even managed to make a very welcome investment in a HD studio. But make no mistake; the television market in Ireland has changed completely. There are now 34 channels of advertising sold in Ireland, up from 7 a decade ago, and when taken together with the entirely value for money driven approach of the advertising industry today, it is difficult to see revenues – and either price or volume - returning to anything like previous highs.
There are bright spots. Independent commercial radio contributes hugely to the plurality of media in that it provides often locally tailored Public Service content on a free to air basis. Moreover, despite the extent of the downturn and the growth in the number of stations in the years prior to that, we still have a diverse and vibrant commercial radio sector. These businesses, the IBI membership, have kept their heads above water in very difficult times, a testament to the connection that you have with your audience.
For RTÉ however, the extent of this challenge cannot be over-emphasised. Given losses to date, the broadcaster simply has to balance its budget this year, no easy task in the current environment. In turn, this points to the pronounced importance of licence fee funding for RTÉ, and of securing that national presence on the airwaves into the future. In that vein, I expect to receive the VFM Report on the Public Service Broadcasting Charge in the very short term. However, to my mind and even before studying the Report, whatever logic existed for a move to a device independent charge two years ago, the case now is even more compelling. The question now is really about the most cost effective means of delivering it.
However, the nature of the service that RTÉ provides is not immutable, like everything else, cloth must be cut to measure, and the broadcaster has to continue to demonstrate that it uses these public funds efficiently in delivering on its public service mandate. On that basis, the BAI 5 year review of funding for both our Public Service Broadcasters is going to be of critical importance when it lands on my desk in the coming weeks. It may well be that we need to consider new legislation to implement the Public Service Broadcasting Charge – such legislation could obviously be used to deliver on any recommendations made by the BAI or their Consultants that Government sees fit to implement.
For Government, this is a challenge. The principles underpinning Government policy in this space are clear – we need a free, robust and diverse media. Bringing that about is less easy – simply put, there are relatively few levers available to Government. We have revised media mergers legislation in train at the moment, but this type of legislation has some obvious limitations; it can’t ‘force’ plurality into being, only stop certain types of activity that might limit it. Similarly, EU State Aid law places clear limitations as to how and where we can use public money – if, of course, we had any money to spend in the first place. On one hand, this points to the central importance of focussing State funding on RTÉ and TG4, of maintaining a critical mass in the broadcasting space, rather than spreading any funds meagrely across a large number of players. On the other hand, it underlines the importance of the commercial radio sector, at national and local level, and of keeping the regulatory framework around that sector under continual review.
However, the fact radio may well seem more robust than a lot of other media - because of the local element or the fact that people can listen while doing other things, or that it can carry advertising that is very close to the consumer – should not blind us from the challenges that are coming. Digital Audio Broadcasting – or DAB – looks very much like a false start, even if there were a market rationale for it in the Irish market. No, as with so much else, radio is ultimately going to have to go online. It may take a while; there are a lot of FM radios out there, in cars, or on window sills around the country. But there are relatively few new radios sold, certainly relative to the number of smart phones or other connected devices, and that is where the audience is going, not just for radio or tv, but for everything. This is why events like todays are so valuable – they offer the possibility of exploring new ways of engaging with and involving the audience, of using all available tools, including social media, to build a brand that can move across different delivery systems.
Critically, this is just the start, the first phase of what promises to be a long process of convergence. This term ‘convergence’ when applied to media doesn’t just mean the simple fact that you can now watch television or listen to the radio on your phone – the implications are far deeper and wider than that. In time, it will likely come to re-fashion media entirely as the relationship between content owners, distribution networks and audiences change. For example, it is possible to see a future where the role now played by television broadcasters, who effectively create or aggregate content and then distribute it, is played instead by a differentiated set of media. Some bodies, like sports rights holders for example, may choose to stream and sell content themselves, offering it across multiple platforms for a share of the revenue, or perhaps just offering it to the market themselves.
There are challenges here, but there are opportunities also. Many of the changes that are becoming apparent are global in scope, and irresistible in nature. The trick, in so far as there is one, is not to try and stop them, or pretend that they are not happening, it is to ride that wave, to use all of the tools that are available. Government, the State, cannot afford to step back from this process either; we already have a series of market interventions and schemes, like Sound and Vision, out there, supporting the broadcast industry or regulating it. All of these will have to be held open to constant review in the coming years, at national as at European level – in fact, the Irish Presidency has a debate next month on critical aspects of media convergence, on foot of a Commission Green Paper on the same subject. For small countries like Ireland, operating close to much larger media markets and in the same language, there are particular challenges ahead. But there are solutions too, and I am confident that our independent commercial radio sector will recognise and seize these as they arise, and that they will be part of our future media landscape, adding diversity and its plurality of voices.