Financial Review

Results and Operating Profit

Despite the general business uncertainty resulting from the war in Ukraine and a highly inflationary environment, RTÉ recorded a modest deficit of €2.8 million in 2022.

While operating costs returned to normal levels, following cost alleviation in 2020 and 2021 due to COVID restrictions on production, commercial revenues also improved after a slow start to the year. TV spot advertising recovered well in the final quarter due to strong interest in the FIFA World Cup.

On the other hand, licence fee income declined slightly compared to 2021 which means that it has still not recovered to pre-COVID levels. The Special Events in 2022 were the FIFA World Cup, UEFA Nations League and the Women’s European Championships Football.

Cash on hand increased by €12.6 million during the year. This is mainly due to the receipt in December 2022 of €15 million in additional public funding arising from recommendations in The Future of Media Report published in 2022. This additional funding is intended to cover operating costs in 2023 and will be recognised then.

Summary Financial Highlights

	2022	2021	Change
	€ m	€ m	€ m
Commercial Revenue	152.1	148.3	3.8
Licence Fee Revenue	195.6	196.1	(0.5)
Total Revenue	347.7	344.4	3.3
Operating Costs (excluding Special Events)*	(332.6)	(315.5)	(17.1)
EBITDA** (before Special Events)	15.1	28.9	(13.8)
Special Events Costs	(6.7)	(15.8)	9.1
EBITDA	8.4	13.1	(4.7)
Depreciation & Amortisation	(11.8)	(11.6)	(0.2)
Gain on Disposal of Assets	-	0.1	(0.1)
Net Finance income	0.4	1.2	(0.8)
(Deficit)/Surplus before Tax	(3.0)	2.8	(5.8)
Tax	0.2	(0.4)	0.6
Net (Deficit)/Surplus for the Year	(2.8)	2.4	(5.2)

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

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

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Commercial Revenue 

2022 commercial revenue of €152.1 million represents a year on year increase of 2.6% (2021: €148.3 million). The main reason for the increase was the performance of other non-trading revenues as RTÉ continues to diversify its revenues.

	2022 v 2021 Change €m	Change %
Commercial Revenue 2021	148.3
Television Trading	(0.3)	(0.3%)
Radio Trading	0.3	1.2%
Digital Trading	0.6	7.1%
Other Non-Trading Revenues	3.2	12.0%
Year-on-Year Movement	3.8	2.6%
Commercial Revenue 2022	152.1

TV spot advertising, the single biggest contributor to commercial revenue, declined by 1.3% on 2021. The year 2022 started optimistically with the removal of lockdown restrictions. However, advertiser confidence was disrupted by the war in Ukraine and increasing energy costs. Continuing supply chain issues and the inflationary environment further hit advertiser confidence. Revenues improved towards the end of the year with significant advertiser demand around the FIFA World Cup. The year on year performance was driven by declines in categories such as Food, Energy and Telecoms, but these declines were offset by increases in the Retail, Travel and Entertainment categories.

Other TV trading revenue, including sponsorship and product placement, increased by 5.7%. With less disruption to the TV programming schedule experienced in 2022 than in 2021, there were opportunities for the resumption of a more regular pattern of sponsorship revenue.

Radio trading, which includes spot, sponsorship and promotions, had a successful year in relative terms, with a year on year increase of 1.2%. Radio spot advertising declined by 1.8%, however this decline was offset by increases across Radio sponsorship and promotion.

The decline in Radio spot advertising was mainly due to a reduction in spend by Government for critical public health messaging. While all Government spend declined in 2022 to 13.3% (2021: 18.6%) of total Radio spot advertising income it continued to represent a significant proportion of the business.

Digital trading revenues increased by 7.1% on 2021. Digital VOD revenue is the largest contributor to digital trading revenues and was up 18.4% year on year. Digital display revenue across rte.ie declined by 20.8% year on year and digital sponsorship increased by 3.8%.

Non trading income increased by €3.2m in the year principally due to digital distribution deals concluded for licencing of the RTÉ Player and also due to the resumption of performances by the RTÉ Concert Orchestra.

PIC (Programme Interaction Competitions) revenue declined by 25.4% year on year, as the level of audience engagement with TV competitions has not returned to pre-COVID levels.

The RTÉ Guide was down 10% year on year and in line with a market that is estimated to have declined by 10%. Total copy sales of 1.657 million included a 9% decline in sales of the flagship Christmas issue, which sold 240,600 copies. Advertising revenue for the RTÉ Guide also declined year on year as the magazine advertising market proved challenging.

As part of RTÉ’s strategy to develop live ticketed events Toy Show, The Musical was staged in December. While this show received favourable reviews, ticket sales were below expectations, not helped by the fact that a number of shows had to be cancelled due to illness amongst the cast.

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 TV licence sales income 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 €221.5 million licence fee collected in 2022, €195.6 million (88%) was received by RTÉ. The remaining licence fee collected, €25.9 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 2022 was down €0.5 million compared to 2021, as TV licence sales failed to recover to pre-COVID levels.

The latest evasion rate available is for 2020. These are calculated by the DTCAGSM and show an evasion rate of 15.2% of chargeable domestic households and business premises. The evasion rate in Ireland is significantly higher than the UK and other European countries (see page 31) and collection costs are more than double other European public service broadcasters.

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 now stands at 16.9% (January 2023), an increase of 1.8% 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 annual public funding has increased by only c.€7 million since then. Once off additional public funding of €15m has also been received for 2023 following recommendations made by The Future of Media Commission. The Commission was established by Government and issued it’s recommendations in 2022. All recommendations except for direct exchequer funding of RTÉ were accepted in principle. The recommendation in relation to reform of the licence fee has now been passed on to a Technical Working Group and RTÉ expect this Group to report in 2023. Unless and until substantial reform to the Licence Fee system is completed, RTÉ’s financial position will remain fragile and unsustainable and its capacity to plan and invest for the future will remain curtailed.

The section ‘How Your TV Licence Fee Is Used’ (see pages 35–36) 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 support, and An Post collection fees.

Operating Costs

Operating costs, excluding Special Events, increased by €17.1 million year on year as production of both in-house and commissioned programmes returned to pre-COVID levels.

Commissioned programme costs increased by €1.9 million as a result of delayed transmission of programmes from 2021 and inflationary increases to production costs during 2022. With a full return of Sports activities, costs increased significantly in 2022 – there was a full GAA season for the first time since 2019, also a full years coverage of the URC Rugby and the 6 Nations Rugby returned to RTÉ. Related travel costs also increased. Energy costs increased by €1.8m as the war in Ukraine pushed prices higher. Employee costs increased by €1 million year on year due to the Pay Agreement reached in November 2022 (see Pay Agreement below), pay increments awarded and some incremental hiring.

Special Events costs decreased in 2022 by €9.1 million as 2021 was an exceptionally busy year for Special Events, with Euro 2020 and the Olympics carried over from 2020 when they were postponed due to COVID.

	2022 v 2021 Change € m
Operating Costs 2021	331.3
Increase in Operating Costs	17.1
Decrease in Special Events Costs	(9.1)
Year-on-Year Increase (Including Special Events)	8.0
Operating Costs 2022	339.3

Revised Strategy

The Revised Strategy 2020-24 was published and put in place in November 2019 to return RTÉ to financial sustainability.

The Strategy targeted €59m of savings against projected costs for the period 2020-22. To date €93m of savings have been delivered. However, like many organisations RTÉ had to drastically adjust its plans in light of the COVID pandemic. As a result, €26m of these savings came from initiatives planned as part of the strategy and a further €67m of savings were achieved through other means.

The public funding elements of the Strategy have not been delivered.

Employee Numbers

At 31 December 2022, there were 1,868 (2021: 1,871) employees, of which 243 (2021: 232) were part-time/casual. The full-time equivalent (FTE) headcount at 31 December 2022 was 1,735 (2021: 1,755). At the start of 2022 the National Symphony Orchestra and its 70 FTE staff transferred from RTÉ to the National Concert Hall.

In January 2023, following a review and professional advice received, 52 actors involved in Fair City were converted from contractor status to employees. The Employment First policy now being implemented is increasing headcount across the organisation. This policy was introduced in 2019 following the Eversheds Report to RTÉ on the use of freelancers / contractors. The RTÉ policy is now to deem all roles to be employment roles unless they meet the criteria as set out in the Code of Practice on Determining Employment Status wherein independent contractor engagements will be offered. It is envisaged that most roles in RTÉ from hereon will be assessed as employment first.

Net Finance Income

Net finance income of €0.4 million arose in 2022 (2021: net income of €1.2 million), comprised as follows:

Finance income for 2022 was €2.1 million (2021: €2.6 million). It included net interest income of €1.7m (2021: €1.4 million) related to IAS 19 defined benefit pension scheme income, investment income of €0.3 million from a joint venture (2021: €0.5 million) and deposit interest.

Finance expense for 2022 amounted to €1.8 million (2021: €1.4 million). The expense of €1.8 million included interest payable on borrowings, deposits, interest on restructuring costs and fair value loss on derivative foreign currency contracts.

Taxation

There was an overall tax credit of €0.2 million in 2022 (2021 : tax charge €0.4 million). A tax charge of €0.3 million arose in 2022 as a result of taxable profits generated. However, this was offset by a deferred tax credit of €0.5 million arising from the movement on taxable temporary differences on property, plant & equipment.

Cash Flow and Borrowings

Total cash balances, including liquid investments, at 31 December 2022 amounted to €114.0 million (2021: €101.4 million). This represents an increase of €12.6 million and was primarily due to the receipt of additional public funding of €15m in December which will be recognised in 2023. The movement in 2022 cash balances can be summarised as follows:

Summary Cash Flow Statement

	2022	2021
	€m	€m
EBITDA	8	13
Operating cash flows: – Working Capital decrease	20	18
Restructuring cash flows: – Payments	(1)	(2)
Income taxes paid	(1)	(3)
Investing Activities:
– Capital Expenditure	(10)	(11)
Financing cash flows:
– Borrowing Repayment	(2)	-
– Interest Paid	(1)	(1)
Net Increase in Cash and Liquid Investments	13	14

At 31 December 2022, RTÉ had bank borrowings of €63.1 million (2021: €65 million) comprising the following:

• 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 2022. An additional term loan facility for €20 million is in place, of which €15 million was drawn down as at 31 December 2022.
• 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 2022 €8 million of the term loan was drawn down.

Financial Risk Management

The Board of RTÉ approves the Treasury policy 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 : Financial Instruments and Financial Risk Management.

Capital Expenditure

RTÉ’s cash expenditure incurred on capital projects in 2022 was €10 million (2021: €12 million). The majority of this spend relates to technology projects and to the DTT asset replacement programme.

Investment of the land sale proceeds generated in 2017 continues with a number of strategic capital projects in progress including a new storage platform, a new ERP system, the consolidation of the post-production estate and the digitisation of the archives. The majority of the land sale proceeds have now been committed to projects.

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) to the Financial Statements : Principal Activities and Segmental Information. 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 2022 as outlined and presented in Note 2.

Regulation

RTÉ is regulated by the BAI as regards 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. 

The Commission for Communications Regulation (ComReg) previously designated RTÉ and it’s subsidiary 2rn as having significant market power in the market for wholesale access to DTT multiplexing services (Market B) and in the market for wholesale access to national terrestrial broadcast transmission and distribution services (Market A). The decision placed certain obligations on both RTÉ (Market B) and 2rn (Market A). Transmission services are provided at cost plus a regulated Weighted Average Cost of Capital as determined by ComReg on investment in 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.

Pay Agreement

In November 2022 RTÉ and the RTÉ Trade Union Group (TUG) reached agreement on a proposed 6% pay increase over the next two years. Non-taxable vouchers were gifted to staff in 2022. The agreement was accepted by ballot in late December. In a joint statement RTÉ and the TUG said ‘the agreement sought to achieve a fair balance, that recognised the pay restraint in RTÉ since 2008 while being responsive to the impact of substantial cost-of-living increases on RTÉ staff and their families.’ The agreement also acknowledged ‘RTÉ's own financial position within a highly disrupted media sector and its obligations to sustain employment, public service programming and its commitments to audiences.’

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 2022, RTÉ had 51 employees (2021: 69) who were members of the scheme.

As at 31 December 2022, the assets of the scheme had a market value of €1,031 million (2021: €1,194 million). The liabilities of the scheme, as valued in accordance with IAS 19 Employee Benefits, were €859 million (2021: €1,047 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 2022, there is a pension asset of €172 million reported in respect of the scheme (2021: €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 2022, RTÉ had 1,243 employees (2021: 1,280) 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 2022, RTÉ had 399 employees who were members of the RTÉ 50/50 Risk-Sharing Pension Scheme (2021: 401).

As at 31 December 2022, the assets of the DB section of the scheme had a market value of €28.6 million. Under IAS 19, the liabilities of the DB section were €19.7 million, giving rise to a surplus of €8.9 million (2021 surplus €1.0 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

RTÉ’s cost base in 2023 will rise significantly due to inflationary pressures and also due to the investment required in digital projects to transform RTÉ for the changing media consumption landscape.

In December 2022 a pay deal was agreed with staff which will see pay rise by 6% over the next 2 years.

The €15m additional public funding received in December 2022 under The Future of Media Commission recommendations will help offset some, but not all, of these cost increases.

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

	2022 €	2021 €
RTÉ One	50.05	45.08
RTÉ2	31.17	32.07
RTÉ Television	81.22	77.15
RTÉ Radio 1	13.49	13.06
RTÉ 2fm	2.60	2.49
RTÉ Raidió na Gaeltachta (RnaG)	8.36	8.13
RTÉ lyric fm	3.54	3.36
RTÉ Radio	27.99	27.04
RTÉ Orchestras	3.88	9.15
Online Services	12.16	11.16
Other Channels and Services	6.97	7.74
Governance and Financing Charges	2.26	2.22
DTT Related	0.49	0.34
RTÉ Activities	134.97	134.80
	84%	84%
RTÉ Support for TG4	5.33	5.39
BAI Levy	1.05	1.24
BAI Sound & Vision Fund	10.64	10.65
An Post Collection Costs and Related Charges	8.01	7.92
Non-RTÉ Activities	25.03	25.20
	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 2022.

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 2022, together with comparative figures for 2021.

2022	RTÉ One	RTÉ2	RTÉ Radio 1	RTÉ 2fm	RTÉ lyric fm	RTÉ RnaG
	€’m	€’m	€’m	€’m	€’m	€’m
Costs
Indigenous Programming	104.8	52.9	27.6	5.5	3.8	10.0
Acquired Programmes – Ireland	3.7	0.3	-	-	-	-
– Overseas	12.3	6.6	-	-	-	-
General Broadcast & Transmission Operations	13.0	9.2	6.0	4.6	0.7	0.6
Transmission & Power Charges	1.6	1.6	1.9	1.1	1.1	1.1
	135.4	70.6	35.5	11.2	5.6	11.7
Hours	Hours	Hours	Hours	Hours	Hours	Hours
Annual Transmission Hours (incl. simulcast)	8,760	8,760	8,805	8,760	8,760	8,760
Overall Average Cost per Transmitted Hour – 2022	€	€	€	€	€	€
All Transmission Hours	15,500	8,100	4,000	1,300	600	1,300

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

Annual Movement
% Change in Cost per Hour1
All Transmission Hours	4.6%	0.9%	(0.2)%	10.1%	5.0%	2.5%

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.