Results and Operating Profit

During 2021, RTÉ’s financial position continued to be impacted by the COVID-19 pandemic. As public health restrictions were relaxed during the year, the advertising market was boosted by demand from businesses encouraging consumers to spend. This led to strong growth in advertising revenues which continued throughout the second half of 2021 and saw commercial revenue for the year finish 10% higher than 2020. Conversely, TV licence sales were lower in 2021, and RTÉ’s licence fee revenue decreased slightly compared to 2020. Content production resumed, and Euro 2020 and the Olympics proceeded in summer 2021, but many other programmes were cancelled or curtailed. The net effect of this was to reduce RTÉ’s operating costs and resulted in RTÉ returning a modest surplus for 2021.

RTÉ’s EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) before special events costs was €28.9 million (2020: €25.9 million). The cost of special events in 2021, including Euro 2020, Olympics and World Cup qualifiers amounted to €15.8 million and was higher than 2020 levels, resulting in a Net Surplus before Tax for the year of €2.8 million (2020: €9.8 million). The Net Surplus after Tax for the year was €2.4 million (2020: €7.9 million).

Commercial revenue increased by €13.8 million as demand from advertisers surged after the lockdown in the first few months, particularly in the second half of the year. Licence fee income failed to recover to pre-COVID-19 levels, with licence fee unit sales down almost 10,000 compared to 2020. RTÉ’s licence fee income was down €0.5 million year on year. Operating costs, including the costs of special events, of €331.3 million were €23.6 million higher than 2020 levels as production increased following the significant curtailment in activity in 2020 and the additional costs of covering Euro 2020, Olympics and World Cup qualifiers.

Summary Financial Highlights

	2021	2020	Change
	€ m	€ m	€ m
Commercial Revenue	148.3	134.5	13.8
Licence Fee Revenue	196.1	196.6	(0.5)
Total Revenue	344.4	331.1	13.3
Operating Costs (excluding Special Events)*	(315.5)	(305.2)	(10.3)
EBITDA** (before Special Events)	28.9	25.9	3.0
Special Events Costs	(15.8)	(2.5)	(13.3)
EBITDA	13.1	23.4	(10.3)
Depreciation & Amortisation	(11.6)	(13.5)	1.9
Gain on Disposal of Assets	0.1	-	0.1
Net Finance income/(expense)	1.2	(0.1)	1.3
Surplus before Tax	2.8	9.8	(7.0)
Tax	(0.4)	(1.9)	1.5
Net Surplus/(Deficit) for the Year	2.4	7.9	(5.5)

* Operating Costs before Depreciation & Amortisation and excluding the incremental costs of Special Events.

** EBITDA: Earnings before Interest, Tax, Depreciation and Amortisation.

Commercial Revenue

2021 commercial revenue of €148.3 million represents an increase of 10.3% on the 2020 figure of €134.5m. The main reason for the overall increase was the performance of TV trading which more than reversed the adverse impact of COVID-19 in 2020, and which benefitted, particularly in the second half of the year, from a significant increase in client spending.

	2021 v 2020 Change €m	Change %
Commercial Revenue 2020	134.5
Television Trading	11.7	15.3%
Radio Trading	1.3	5.6%
Digital Trading	1.6	23.2%
Other Non-Trading Revenues	(0.8)	-2.5%
Year-on-Year Movement	13.8	10.3%
Commercial Revenue 2021	148.3

TV spot advertising, the single biggest contributor to commercial revenue, increased by 14.9% on 2020. The year 2021 was again volatile, as the year started slowly due to the lockdown restrictions, but more than recovered during the year. This was underpinned by advertiser demand around the Euro 2020 and Olympics and the surge in advertising bookings in the last four months of the year which mirrored the pattern from the previous year. The year on year performance was driven by increased spending from categories such as Drink, Entertainment, Food and Retail which broadly were the same categories most badly affected by the pandemic restrictions in 2020.

Total TV trading revenue, including Sponsorship and Product Placement, increased by 15.3% overall. With less disruption to the TV programming schedule being experienced in 2021 than was the situation in 2020, there were opportunities for the resumption of a more regular pattern of sponsorship revenue than in the previous year. This was especially so in relation to Drama programmes which saw a substantial increase in revenue based on a number of new commissions.

Radio trading, which includes spot, sponsorship and promotions, had a successful year in relative terms, with a year on year increase of 5.6%. This increase was driven by all elements of Radio trading with Radio spot up by 3.7%, Radio sponsorship revenue being 12% higher and radio promotions, which were 13% higher, despite the continued curtailment of outside broadcasts and events.

Radio spot advertising grew by 3.7%, which was helped by continued Government use of radio to deliver critical public health messaging. While all Government spend declined in 2021 to 18.6% (2020: 21%), it continued to represent a significant proportion of the business.

Digital trading revenues increased by 23.2% on 2020. Digital VOD revenue is the largest contributor to digital trading revenues and it was up 17% year on year. Digital display revenue across rte.ie increased by 3.3% year on year and digital sponsorship increased by 30%.

PIC (Programme Interaction Competitions) revenue declined 20% year on year, as the level of audience engagement with TV competitions has not returned to pre-pandemic levels and also due to editorial decisions not to run viewer competitions on certain Late Late Shows in the year. Instead these programmes raised money for individual charities.

The RTÉ Guide had another strong year in circulation terms and was just 1% down year on year in a market that is estimated to have been down 8%-10% year on year. Total copy sales of 1.840 million included a 2% decline in sales of the flagship Christmas issue, which sold 265,000 copies. Advertising revenue, which was adversely impacted in 2020, saw a welcome rebound in the year and increased by 29% on the previous year.

Television Licence Revenue

As RTÉ is a dual-funded public-service broadcaster with a broad range of statutory responsibilities, the level of public funding it receives to fulfil its role is crucial. The Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media (DTCAGSM) is responsible for the collection of licence fee monies from An Post (the appointed agent for the sale of TV licences) and from the Department of Social Protection (DSP) in respect of ‘free’ television licences. The DTCAGSM then makes a grant to RTÉ out of licence fee monies collected.

Of the €221.9 million licence fee collected in 2021, €196.1 million (88%) was received by RTÉ. The remaining licence fee collected, €25.8 million, was used to pay An Post collection costs and related charges and to provide funding for the Broadcasting Authority of Ireland (BAI) Sound & Vision Fund. Licence fee income received by RTÉ in 2021 was down €0.5 million compared to 2020, as TV licence sales failed to recover to pre-pandemic levels due to the ongoing curtailment of TV inspector activity as a result of the COVID-19 restrictions.

Latest evasion levels for 2020, as calculated by the DTCAGSM, are 15.2% of chargeable domestic households and business premises. Evasion levels in Ireland are significantly higher than the UK and other European countries (see page 25) and collection costs are more than double other European PSBs. An Post, DTCAGSM and RTÉ continue to work to address evasion levels.

Also of concern is the increase in the number of homes that do not have a traditional television set. This has been growing steadily over recent years, as per the Nielsen Establishment Survey, and is now 15.1% (January 2022), an increase of 2.2% in the past year. As media consumption patterns become more complex, the television licence fee mechanism reflects less and less how people consume public-service content. It is for this reason that the mechanism is being changed in other countries to a media charge or other methods, rather than being device dependent.

Despite the BAI’s recommendation of an immediate increase of €30 million in public funding, made in 2018 as part of its review of RTÉ’s 2018–2022 strategy, RTÉ’s public funding has increased by only c.€9 million since then. The need for increased public funding remains as acute as ever, despite the temporary relief on RTÉ’s finances resulting from the curtailment of content and production in 2020 and 2021. The Future of Media Commission was established by Government to address this issue and its recommendation is due in 2022.

The section ‘How Your TV Licence Fee Is Used’ (see pages 28–29) outlines how the licence fee is used, with 84% of total licence fee invested in RTÉ services and activities. The remaining 16% is invested in non-RTÉ activities, including the BAI Sound & Vision fund, TG4 deduction and support, and An Post collection fees.

Operating Costs

2021 total operating costs were €331.3 million, an increase of €23.6 million on 2020 levels, as content production resumed during the year. This also includes the cost of special events in 2021 of €15.8 million relating to coverage of the European Championship, Olympics and World Cup qualifiers.

Operating costs, excluding special events, increased by €10.3 million mainly as a result of the reinstatement of some content production, both in-house and commissioned. Employee costs remained flat on 2020 levels. Acquired programme cost fell by €3.1 million on 2020 due to COVID-19 disruption to production in 2020 which impacted the supply of new films and series in 2021.

In June 2021, a Revenue audit relating to the classification of contractors concluded. Arising out of the audit, RTÉ paid a settlement of €1.2 million to Revenue. A follow-on investigation is currently under way by the Department of Social Protection into the PRSI status of contractors.

	2021 v 2020 Change € m
Operating Costs 2020	307.7
Increase in Operating Costs	10.3
Increase in Special Events Costs	13.3
Year-on-Year Increase (Including Special Events)	23.6
Operating Costs 2021	331.3

Employee Numbers

At 31 December 2021, there were 1,871 (2020: 1,866) employees, of which 232 (2020: 240) were part-time/casual. The full-time equivalent headcount at 31 December 2021 was 1,755 (2020: 1,758).

Shortly after the year end, on 24 January 2022, the National Symphony Orchestra transferred out of RTÉ to the National Concert Hall. This further reduced FTE by 70.

Net Finance Income

Net finance income of €1.2 million arose in 2021 (2020 net expense of €0.1 million), comprised as follows:

Finance income for 2021 was €2.6 million compared to €1.6 million in 2020. It included net interest income of €1.4 million related to IAS 19 defined benefit pension scheme (2020: €1.4 million); investment income of €0.5 million from a joint venture (2020: €0.2 million); and fair value gain on derivative foreign currency contracts of €0.7 million (2020: loss €0.7 million).

Finance expense for 2021 amounted to €1.4 million compared to €1.7 million in 2020. The expense of €1.4 million included interest payable on borrowings, deposits, refinancing costs and interest on restructuring costs.

Taxation

There was an overall tax charge of €0.4 million in 2021 (2020 €1.9 million). The tax charge arises in the year as a result of the surplus generated. The Income Statement tax charge includes a deferred tax credit of €0.5 million resulting from timing differences between capital allowances claimed and depreciation charged.

Cash Flow and Borrowings

Total cash balances including liquid investments at 31 December 2021 amounted to €101.4 million (2020: €87.2 million), an increase of €14.2 million primarily due to the improved operation results for the year. The movement in 2021 cash balances can be summarised as follows:

Summary Cash Flow Statement

	2021	2020
	€m	€m
EBITDA	13	23
Operating cash flows: – Working Capital (increase)/decrease	18	(2)
Restructuring cash flows: – Payments	(2)	(1)
Income taxes paid	(3)	-
Investing Activities:
– Capital Expenditure	(11)	(6)
Financing cash flows:
– Borrowing Drawdown	-	5
– Interest Paid	(1)	(1)
Net Increase in Cash and Liquid Investments	14	18

The impact of the Covid-19 pandemic has alleviated some pressure on RTÉ’s finances in 2020 and 2021. However, this is expected to be temporary. Cash management continued to be a key financial management priority throughout 2021 and will continue into the future.

At 31 December 2021, RTÉ had bank borrowings of €65 million (2020: €65 million) comprised as follows:

1. 2rn, RTÉ’s transmission subsidiary, has a €60 million Club Facility with Barclays and Bank of Ireland. €40 million of this facility relates to project finance for the transmission and distribution infrastructure required for the Digital Terrestrial Television network (DTT), and was fully drawn down as at 31 December 2021. An additional term loan facility for €20 million is in place, of which €15 million was drawn down as at 31 December 2021.
2. RTÉ has a €20 million facility with Bank of Ireland, which includes a €10 million revolving credit facility and a €10 million term loan facility. As at 31 December 2021 the €10 million term loan was drawn down.

Financial Risk Management

The Board of RTÉ sets the treasury policies of the Group, which cover borrowings, cash management, counterparty credit risk, liquidity risk, interest rate risk and foreign exchange risk. RTÉ’s exposure under each of these risks is set out in note 21 to the financial statements.

Capital Grant

A capital grant was previously received from the DTCAGSM to facilitate the clearing of the Spectrum 700 MHz frequency band, as stipulated by the EU. Capital grants are recorded as deferred income and released to the Income Statement on a basis consistent with the depreciation policy of the underlying assets.

Capital Expenditure

RTÉ’s total expenditure incurred on capital projects in 2021 was €16.9 million (2020: €7.5 million). The majority of spend relates to technology projects and DTT asset replacement programme. A number of projects that had been delayed in 2020 due to COVID-19 restrictions were progressed.

Spend is also under way on a number of strategic capital projects approved by the RTÉ Board to be funded from the land sale proceeds including an upgrade of Studio 5, upgrade of the channel & rights management system, a new storage platform, upgrades to the radio studios, a new ERP system, consolidation of the post-production estate and the digitisation of the archives.

Segmental Reporting and Cost Allocation

RTÉ’s segmental analysis is prepared in accordance with IFRS 8 Operating Segments which is set out in note 2(d). RTÉ’s primary reporting segments are its divisions which were established on 1 January 2018 following an organisation restructure. RTÉ’s cost allocation methodologies have been consistently applied for 2021 as outlined and presented in Note 2, Segmental Reporting.

Regulation

RTÉ is regulated by the BAI in relation to its obligations as a public-service broadcasting corporation. RTÉ (as required by the Broadcasting Act 2009) cooperates with the BAI in the annual and five-year public funding reviews carried out by the BAI under section 124 of the Act. In late 2019, RTÉ published its Revised Strategy 2020–2024, a plan designed to bring RTÉ to financial sustainability. RTÉ is fully engaged in the subsequent annual reviews with the BAI and has also engaged fully with the Future of Media Commission in relation to its role in recommending reform of the future funding model for public service media.

The Commission for Communications Regulation (ComReg) previously designated RTÉ and 2rn as having significant market power (SMP) in the markets for the provision of transmission and distribution services to radio broadcasters and the DTT multiplex operator as well as the downstream supply of DTT multiplexed services to television and radio broadcasters. The decision placed certain obligations on both RTÉ (Market B) and 2rn (Market A). Transmission services are provided to broadcasters at cost plus a ComReg approved return on investment on the net assets employed. Separated accounts comprising regulated accounts for each of Market A and Market B, together with primary accounting documentation, are published in accordance with regulatory requirements.

Pensions

RTÉ operates three pension schemes for its employees: a defined benefit (DB) scheme, a defined contribution (DC) scheme and a hybrid scheme (elements of DB and DC).

RTÉ Superannuation Scheme

The RTÉ Superannuation Scheme is a funded, contributory DB scheme, established under legislation and sponsored by RTÉ. No new employees have been admitted to the scheme since 1989. As at 31 December 2021, RTÉ had 69 employees (2020: 98) who were members of the scheme.

As at 31 December 2021, the assets of the scheme had a market value of €1,194 million (2020: €1,096 million). The liabilities of the scheme, as valued in accordance with IAS 19 Employee Benefits, were €1,047 million (2020: €949 million). As required under IAS 19, the excess or shortfall of the assets compared to the liabilities of the scheme is reported as an asset or liability on RTÉ’s statement of financial position. Therefore, as at 31 December 2021, there is a pension asset of €147 million reported in respect of the scheme (2020: €147 million).

The scheme has a surplus under MFS and meets the solvency requirements under the risk reserves, therefore no funding proposal is required for this scheme.

RTÉ Defined Contribution Scheme

The RTÉ Defined Contribution Scheme is a funded, contributory DC arrangement that has been open to new members since 1989. As at 31 December 2021, RTÉ had 1,280 employees (2020: 1,252) who were members of the scheme.

RTÉ 50/50 Risk-Sharing Pension Scheme

The RTÉ 50/50 Risk-Sharing Pension Scheme is a funded, contributory hybrid scheme with DB and DC elements sponsored by RTÉ. The scheme commenced in September 2010 as an optional pension arrangement for eligible employees. As at 31 December 2021, RTÉ had 401 employees who were members of the RTÉ 50/50 Risk-Sharing Pension Scheme (2020: 385).

As at 31 December 2021, the assets of the DB section of the scheme had a market value of €32.8 million. Under IAS 19, the liabilities of the DB section were €31.8 million, giving rise to a surplus of €1.0 million (2020 surplus €4.0 million). This is reported as an asset on RTÉ’s statement of financial position.

The DB section of the scheme has a surplus under MFS and meets the solvency requirements under the risk reserves; therefore, no funding proposal is required for this scheme.

Outlook

1. A core pillar of the Revised Strategy 2020–2024 was increased public funding for RTÉ, as recommended previously by the BAI. To date, apart from the €9 million reversal of previous cuts to licence fee funding, no additional public funding has been forthcoming. The Future of Media Commission was tasked with making recommendations in terms of RTÉ’s future funding. While its report was issued to Government in 2021, we still await its publication.
2. Although many of the cost savings initiatives in the Revised Strategy 2020–2024 have been delivered, some initiatives relating to payroll costs have not been possible to implement due to their rejection at industrial relations negotiations.
3. Inflation represents a significant risk for the year ahead. Inflation is currently running at c. 7% in the economy. RTÉ is likely to face energy and other inflationary pressures as the year progresses.

How Your TV Licence Fee Is Used

The utilisation of licence fee monies received by RTÉ to fund its public services is reported in note 2 to the financial statements.

The basis on which the licence fee is attributed to channels and services is set out in note 2(c). RTÉ attributes public funding to individual services in a way that reflects the net cost of the public service. The net cost of public service is determined by deducting the contribution from commercial activities from the gross cost of delivering the public service.

The following table represents how an individual TV licence fee is used, bearing in mind that RTÉ is not the sole recipient of TV licence fee monies:

Utilisation of Each TV Licence Fee Collected

	2021 €	2020 €
RTÉ One	45.08	48.72
RTÉ2	32.07	26.45
RTÉ Television	77.15	75.17
RTÉ Radio 1	13.06	14.04
RTÉ 2fm	2.49	2.71
RTÉ Raidió na Gaeltachta (RnaG)	8.13	8.14
RTÉ lyric fm	3.36	3.62
RTÉ Radio	27.04	28.51
RTÉ Orchestras	9.15	7.98
Online Services	11.16	10.74
Other Channels and Services	7.74	8.30
Governance and Financing Charges	2.22	2.75
DTT Related	0.34	0.64
RTÉ Activities	134.80	134.09
	84%	84%
RTÉ Support for TG4	5.39	5.31
BAI Levy	1.24	1.30
BAI Sound & Vision Fund	10.65	10.59
An Post Collection Costs and Related Charges	7.92	8.71
Non-RTÉ Activities	25.20	25.91
	16%	16%
Cost of TV licence	160.00	160.00

The pie chart below summarises the attribution of the TV licence fee revenues that were received by RTÉ to the public-service element of RTÉ’s activities during 2021.

Cost Per Transmitted Hour

As part of its Annual Statement of Performance Commitments, RTÉ publishes the average cost per transmitted hour of programmes broadcast by channel. The table below provides this information for 2021, together with comparative figures for 2020.

2021	RTÉ One	RTÉ2	RTÉ Radio 1	RTÉ 2fm	RTÉ lyric fm	RTÉ RnaG
	€’m	€’m	€’m	€’m	€’m	€’m
Costs
Indigenous Programming	98.9	52.1	27.3	5.2	3.6	9.8
Acquired Programmes – Ireland	3.3	0.3	-	-	-	-
– Overseas	11.3	6.6	-	-	-	-
General Broadcast & Transmission Operations	14.0	8.9	5.9	4.0	0.6	0.5
Transmission & Power Charges	2.0	2.0	2.4	1.0	1.1	1.0
	129.5	69.9	35.6	10.2	5.3	11.3
Hours	Hours	Hours	Hours	Hours	Hours	Hours
Annual Transmission Hours (incl. simulcast)	8,760	8,760	8,806	8,760	8,760	8,760
Overall Average Cost per Transmitted Hour – 2021	€	€	€	€	€	€
All Transmission Hours	14,800	8,000	4,000	1,200	600	1,300

2020	RTÉ One	RTÉ2	RTÉ Radio 1	RTÉ 2fm	RTÉ lyric fm	RTÉ RnaG
	€’m	€’m	€’m	€’m	€’m	€’m
Costs
Indigenous Programming	98.7	31.4	27.9	5.0	3.9	9.9
Acquired Programmes – Ireland	2.9	0.6	-	-	-	-
– Overseas	13.2	9.3	-	-	-	-
General Broadcast & Transmission Operations	12.1	8.3	5.4	4.2	0.6	0.5
Transmission & Power Charges	2.2	2.1	1.9	1.1	1.1	1.1
	129.1	51.7	35.2	10.3	5.5	11.5
Hours	Hours	Hours	Hours	Hours	Hours	Hours
Annual Transmission Hours (incl. simulcast)	8,784	8,784	8,845	8,784	8,784	8,784
Overall Average Cost per Transmitted Hour – 2020	€	€	€	€	€	€
All Transmission Hours	14,700	5,900	4,000	1,200	600	1,300

Annual Movement
% Change in Cost per Hour1
All Transmission Hours	0.6%	35.7%	1.3%	(0.4)%	(4.5)%	(0.7)%

1. Costs per hour are rounded to nearest hundred euro. Percentage changes are calculated from the costs per hour before rounding.

Changes in average cost per transmitted hour are due to changes in programme costs due to a range of factors including changes in programme type and programme mix, levels of co-funding, the number of first transmission hours and repeat programming.