Analysis: funding models across Europe show the need for sustainability, security, editorial independence and value for money
Revelations regarding RTÉ have focused attention on how Irish public service media are funded and also how they should be funded. It’s a question asked with regard to public service media everywhere and, while broad approaches to funding can be delineated, no two countries have adopted quite the same approach.
RTÉ’s funding mechanisms are inherited from its origins as the 2RN radio station in 1926. 2RN initially relied on a combination of duties levied on imported wireless sets and a licence paid on radio (and later television) set ownership. Advertising was only actively pursued after 1932 when the new Fianna Fail administration absorbed import duties into the central exchequer. A second pubic service media channel, TG4, has been directly funded by the exchequer since its establishment in 1996, augmented to a small degree by advertising revenue.
Variants on RTÉ’s dual-funding (licence fee and advertising) model developed across Europe in the 20th century. Other approaches were possible. British parliamentary committees' refusal to countenance advertiser influence on the BBC meant it came to rely upon licence fee revenue, topped up by British Foreign Office funding (for the World Service) and – later - income from international programme sales.
From RTÉ One's Prime Time, RTÉ and the Tubridy payments explained
However, 21st century technological and market changes demanded a re-assessment of public service media funding rationales. Tying these revenues to licence fees associated with a particular reception technology (namely television) became harder to sustain when that technology was no longer a prerequisite for accessing public service media.
Indeed, in July 2022 the Austrian Constitutional Court ruled that legislation limiting licence fee obligations to households with radio or TV sets was unconstitutional because it failed to account for those watching the same content online. Fully 13% of Irish homes have formally declared that they do not have a television set (and thus are exempt from paying the licence fee) but they almost certainly access some public service media content online.
The changing nature of advertising markets has also been significant. In 2008, RTÉ's advertising income was more than double the entire online advertising market in Ireland. The ascent of online platforms reversed this: by 2025, it is projected that the Irish advertising revenues of Google alone will be nearly double the total of television advertising. RTÉ saw its commercial income fall from €243m in 2007 to €145m in 2021 and there is almost no prospect this trend will reverse.
From EBU, news report on how public service media funding is under threat
The declining viability of both elements of the old dual-funding model has given governments an opportunity to consider new mechanisms, ones which offer sustainability and security (read: reduce evasion levels), facilitate editorial independence, are progressive (i.e. levied according to income) and offer value for money. But what are the options?
The European Broadcasting Union (EBU) points to six main types of funding for public service media: direct exchequer funding, a licence fee, other public funding outside direct state or licence fee sources, advertising, other commercial income and miscellaneous. Of EBU members surveyed in 2021, 29 primarily relied upon direct exchequer funding, 20 upon a licence fee and 2 upon public funding outside direct state or licence fee sources. That licence fee revenues continued to account for the majority (57.1%) of public service media funding in Europe and North Africa stems from the fact that they remained the norm in the largest EBU markets (the UK, Italy, Germany and, until recently, France) in 2021.
In their deliberations on the future of funding in Ireland, the Future of Media Commission considered all of the above. Purely commercial or state-funded approaches were dismissed because neither could provide sufficient funding. The licence fee was rejected as anachronistic, regressive and hard to collect: evasion rates surpassed 15% in 2020.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
From RTÉ News in July 2022, Government to 'overhaul' TV licence system
The Commission also considered the preferred option of the 2017 Oireachtas Committee on licence fee reform: the Household Charge. In 2013, Germany replaced their licence with a requirement for all German households and businesses to pay a broadcast levy (set at €17.50 per month) regardless of whether they owned a television set. Such levies de-link funding from a specific technology (the television set) and, by connecting payment obligations with property ownership, reduce evasion. Despite this the Commission concluded that existing Irish property registers were not adequate to the task and the levy might also be seen as increase-by-stealth of the Local Property Tax.
Which left direct exchequer funding. Already the fastest growing system elsewhere (the Netherlands, Denmark, Norway, Slovakia and France have all replaced their licence fee with it since 2000), the Media Commission concluded that it offered the "best prospect for a sustainable, future-proofed, equitable and publicly acceptable funding model".
But direct exchequer funding inevitably raises concerns that a state might exploit control of purse strings to rein in editorial independence. One direct funding approach appeared to mitigate these concerns: the Finnish "YLE Tax". Introduced in 2013, the tax is progressive (individuals who earn €14k or less pay nothing) and equitably distributed (corporations also pay pro rata to their revenues up to a maximum of €3,000).
From EBU, the value of public service media
Despite having a population only slightly larger than Ireland's, the tax generates over €500m for YLE, which consequently has no requirement for commercial revenues. Because the basis on which the tax is levied is predefined, there is little scope for arbitrary state interference in the distribution of the revenues collected from it. Sweden considered it sufficiently impressive as to adopt the same system more or less wholesale in 2019.
The Finnish system clearly appealed to the Media Commission, but it encountered opposition from the Revenue Commissioners. Revenue objected to "hypothecation" of tax revenues (collection of tax for predetermined purposes) and expressed concerns about overly-complicating the tax code. Given this, the Media Commission recommended instead an "integrated taxation approach" which would see public service media objectives "designated as a core expenditure item funded out of general taxation". In effect then, funding would be voted upon as part of the annual Dáil estimates debate.
The Future of Media Commission Report contained 50 recommendations but the one relating to public service media funding was the only one not immediately adopted. The State has been criticised for this but the proposal is potentially radical. Although the State would fund public service media activity, primary responsibility for determining the scale of this funding would fall to the newly established Coimisiún na Meán, exercising its judgement independently of both state and media stakeholders like RTÉ and TG4.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
From RTÉ Radio 1 podcast Your Politics, assessment of what we've learned from the appearance of RTÉ executives and board members before the PAC
This represents a sea change in the locus of power with regard to public service media. The arms length relationship created between State and broadcaster by the 1960 Broadcasting Act was undoubtedly a progressive move. However, recent events have created some public concern around a lack of oversight of the Irish institution.
The Future of Media Commission could not have anticipated that its recommendations would play out in the particular context they have. Nonetheless, placing responsibility for public service media funding into the hands of an institution - Coimisiún na Meán – primarily tasked with protecting public service media (as opposed to a particular institutional embodiment of public service media – i.e. RTÉ) may offer an elegant way forward for all concerned.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ
