A View To Kill

As the long-awaited consultants' report by RTE and Atlantic Satellites prepare for a massive assault on the airwaves, who will survive the business of broadcasting?
In the past few weeks RTE has been treated with the sort of attention a cat would merit at a dog show. Trampled by consultants, rejected by the Department of Communications, and riled by the press, the station had its back against the wall.

Two major developments could fundamentally change the nature of RTE and by implication the entire broadcasting industry in Ireland. The first, is the conclusion of the consulltants' report on the workings of Monntrose, the second is the formal arrival of satellite television.

Briefly, Stokes Kennedy Crowley, the accountancy firm, was commisssioned in May this year to produce a "fundamental review" of RTE within six months, by Communications Minisster, Jim Mitchell. On Thursday 19 September, the report, all 259 pages of it, was released to the Minister, the station, and anybody else that was prepared to wade through it.

In fact, the consultants spared the station. SKC did not drive the stake into the heart of Montrose, as many had predicted. The report made it clear what was wrong with RTE, and for once, RTE was told how to put things right.

In essence, the consultants disscovered that RTE was in effect "a uniquely good" television and radio service. For the first time somebody other than RTE personnel was serioussly praising the station in its home territory. "The high quality of its programmes" would tum out to be the station's saving grace.

The problem was that while the station was undoubtedly making qualiity programmes and developing apace in technical matters, it was overspendding in almost every single department, particularly in television. "The resulltant situation" said the report, "is RTE's cash deficit which will shortly approach £ 11 million." A financial crisis was facing the station.

It was time to put on the brakes. Unfortunately in an organisation of its kind with a staff of 2,200 people, savings would chiefly be made in reducing staff numbers. And so the station with fourteen active trade unions was advised to let go 320 people, in an effort to save £5.5 milllion a year.

Though SKC recommended that 320 people be laid off, it is a recommmendation, not an order: the job is easier said than done. "How the hell will they go about letting that many people go?" asks David Shaw-Smith, an ex-employee of the station, and now an independent film-maker. "In RTE everybody good and bad is going to fight tooth and nail to hold onto their jobs," says Shaw-Smith. Moreeover, as many of the people to be let go at the station have highly speciaalised skills, replacement work will be extremely difficult to find.

Yet the provision is probably the most important section of the report. The survival of the station will very much depend on just how many reedundancies RTE can negotiate with its group of unions.

As forecast by all and sundry, R TE has been swamped with cost controls, time sheets, and activity reviews by the consultants. Indeed almost every trick in the accountancy workbook has been put forward to revive the station. One particular provision has drawn the attention of observers throughout the broadcasting industry - total costing in programming. Total costing may sound like another piece of dry accountancy jargon, but in fact the practice, or indeed the lack of it, may very well be the black hole in the finances of R TE.

Total costing is the entire cost of a programme, from the price of the carpenter's nails to the starlet's stockkings. RTE does not calculate its proogramme costs by total costing. It takes down what is known as above the line expenses, ie expenses incurred in the making of the programme, actors fees and travelling expenses for example. Below the line costs are ignored. For instance, the cost of heat and light during the making of the programme, or the proportion of engineering salaries used up during that time.

Because RTE has not adopted total costing, programmes have been underrpriced. Independent film makers when submitting tenders to RTE must preepare a total cost. This is why indepenndent producers have shoestring buddgets, and why the number of these producers in this country is negliigible. "Total costing is the key," l according to David Collins, Executive Director of Strongbow Productions. (Strongbow just finished filming its first major feature film - Eat The Peach - some weeks ago.) "We are not looking for a handout," suggests Colllins, "but we would like a competitive basis to be established. RTE do not do total costing. Working on that basis overheads cost nothing! The below the line cost is extremely large. About eighty per cent of our costs are overrheads and it's obvious what's wrong."

Louis McRedmond is Head of Innformation at RTE. He suggests that total costing has been on the cards for some time at Montrose. "I think this form of accounting will be coming into RTE," says McRedmond. When queried as to the delay he explained "we had planned to introduce the sysstem in any case." As with many other reforms the consultants report may just have given R TE an extra push.

In conclusion the SKC report made it clear that what RTE needed in the immediate future was more revenue. To do this in the short term the connsultants recommended that RTE get a once-off £2 increase in the licence fee and that the station be given a chance to increase its advertising revenue where possible.

Having secured an increase in short term income the next intention of the station would be to increase the nummber of home produced programmes.

Programme making was the main busiiness of RTE, and the entire report is aimed at straightening out this actiivity. It transpired that RTE's proogramme output was lagging behind its neighbours in Europe. "Only about thirty-five per cent of RTE's programmmes are home-produced," said the report. "Which compares with a median figure of fifty per cent for the Euroopean broadcasting union as a whole."

Tam ratings had consistently shown home programmes were more popular than imported material. To step up home production the consultants put forward three options; all three were to be pursued. The station was advised to increase the number of programmes produced at Montrose, to increase the amount of material "bought in" from independent Irish producers and to get involved in more co-production work. More programmes would mean more advertising which in turn meant more revenue. The success of this strategy would determine whether the station would sink or swim.

The whole point of bringing in the consultants was to see how RTE "would face the future challenges of broadcasting." Particular reference was made to satellite television. As it turned out the Westsat consortium led by RTE was deemed unsuitable to take up the satellite proposed by the Deepartment of Communications. Jim Mitchell clearly did not wish to see RTE losing any more money.

Atlantic Satellites, a consortium led by Irish businessman James Stafford, was given permission (negotiations perrmitting) to launch a satellite with up to five TV channels within the next three and a half years. The project is likely to cost in the region of £300 million. Satellite television is probably

the most important development in television distribution to date. It is not by any means a licence to print money. It may in the long run be immensely profitable, but in the short term it is immensely risky.

Without going into confusing detail as to how the Atlantic satellite will be launched or monitored - how the sysstem will work should be explained.

The idea is that the Atlantic satelllite will hold up to five TV channels capable of broadcasting to Ireland,

the UK and parts of Western Europe. It will also carry a facility for twentyyeight telecommunications frequences. (The telecommunication facility is exxplained inset.) Eventually the satellite will beam programmes across Western Europe to a potential audience of 500 million people by means of cable systems or individual satellite dishes.

The Atlantic satellite is a purely commercial venture. It will sell the channels to whoever will buy them, as long as the Department of Commuunications approves the purchase. What sort of television entertainment we may expect from this arrangement has been the subject of much speculation in recent months. Two very different views are put forward by two former overseers of RTE.

T.P. Hardiman takes a positive outtlook. Hardiman served as DirectorrGeneral at R TE from 1968 to 1975. He is currently chairman of Cognotec Information Systems. "I think Irish broadcasting is in a position to benefit from the satellite development," says Hardiman. "We have the benefit of the English language and our market is going to be mainly in the UK. Bearing in mind that we can supply straight into the English language, I feel Irish programme making should be encouraged.

"We have had very high standards imposed upon us because of the proximity to Britain. This development is an opportunity. Though we still don't know how this market will develop in the UK, it's early days yet."

Donal 0 Morain, long associated with Gael Linn, and a past Chairman of the RTE Authority, has few illuusions on how the satellite market will develop. "This is a totally commercial venture," he says. "There is nothing wrong with that, but there is someething wrong with over-commercialisa-' tion.

"This will only help to bring in more and more soap operas from -rnoming till night. There is this makeebelieve attitude that we can make programmes and they will sell interrnationally. In my time at R TE the Australians offered to buy a series of The Riordans which we thought was a fine idea. But then they asked us to give the programme 'an international slant'. In fact they wanted to give it an Australian slant. This is what you get and this is why I have no confiidence in ethnic Irish programmes sellling abroad, from past experience."

At present members of the RTE Authority are not in a position to speak on the satellite project until the authority prepares a reply to Jim Mitchell on the SKC report. Nevertheeless it is widely held that many people in RTE were actually relieved when the Westsat proposal was rejected for the satellite project. The present situaation leaves the station in a position where it can concentrate in making and selling programmes.

John Baragwanath is head of Proogramme Sales and Co-productions at RTE. He feels that the station should take the opportunity presennted by the satellite. "I think it is vitally important that Irish television can get into the European market. If you think about it, no one else except the Americans has broken into the UK market - that will be our main target.

"We could put a service into the UK - RTE could double its home market. Irish programmes are being shown at prime time in the UK at the moment - English people have and want RTE. But if you are selling proogrammes to a satellite audience, you will need a broad approach. An awful lot will depend on what the Americans will do. As it stands people all over the world want to watch Dallas and Dynasty. This is the competition."

On the subject of satellites perrhaps the most enthusiastic sector in Irish broadcasting is the independent film makers. David Shaw-Smith, direcctor of the highly acclaimed 'Hands' series, compares the opportunities of the satellite project with those already created by Channel 4.

"Channel 4 has proved that 'buying in' from independent Irish film makers works. Channel 4 does not have studio facilities as such, it relies on 'bought in' and commissioned work. Satellite channels will operate on the same basis.

"I think it is a tangible opportunity for independent film makers to make RTE aware of the possibilities in this form of communication." There will be all sorts of headaches with satellite TV, but I don't think anybody really knows what is going to happen."

Indeed very few people in the broadcasting business seem to have any idea what is going to happen with satellite TV, and especially who would take up the Atlantic channels apart from the possibility of R TE.

Only Atlantic Satellites itself can . offer some suggestions. Donal Flynn, a director of Atlantic Satellites, preedicts R TE may even take two of the five channels. One channel would aim at the British market and maybe one more in the long term would replace the existing national television struccture."

Who will take up the vacant Atlanntic channels? "Well you must think of people like Rupert Murdoch and Robert Maxwell," says Flynn. "They have the resources to hire the facilities. I believe there is a market for a pop music station, a European version of MTV, that's one possibility. There are certain US stations that have been developed to the point where they can afford to take on this opportunity. HBO (home box office) for instance, or stations like Ted Turner's 24 hour news service.

"It's an extremely buoyant market. RTE and independent film makers have a great opportunity but they will have to put on their thinking caps. This is a hard headed business and they are going to have to compete with Dallas. But anything could happpen. It would be a tremendous dissappointment naturally if RTE did not take the opportunity."

Whether or not RTE will be in a position to take the opportunity on depends very much on the success of the consultants' report. If all goes well by the time the satellite goes up in 1988 the various strands of RTE's efforts to boost home production and cut its heavy spending will be coming together.

If by that time RTE has managed to reform itself to the point of finanncial viability it would be surprising if the station does not take the offer of a satellite channel and the opportunity to double the market for the high quality material it is able to produce.

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THE SATELLITE

FOR THE FIRST FEW YEARS THE majority of people receiving the Atlantic satellite will probably get the extra channels through the existting cable network. This will probably cost a few extra pounds a week. Only enthusiasts will invest in individual satellite dishes which currently retail at about £2,800. The advantage of an individual dish is that: the owner has a much larger range of stations availlable.

According to John May, owner of the Satellite Store in Dawson Street, Dublin, "By the time Atlantic goes up satellite dishes should cost about £ 1 ,000. The price will hardly drop much lower than that. In the USA at the moment the cheapest dish is about £600."

At the moment, a person buying a satellite dish can receive about six extra channels. The main satellite channels available at present are Sky, Premier, and Mirror Vision. Sky is , owned by Rupert Murdoch, and specialises in home entertainment, ie soap operas and detective proogrammes. Premier and Mirror Vision are film channels. The specialised nature of satellite channels is unnlikely to change in the near future.

When Atlantic goes up, Dublin, Cork, Limerick and Galway will probably receive the five extra channels through the existing cable systems in those towns. People living outside these areas will have to get individual satellite dishes to tune in to the Atlantic arrangement.

Professor Michael Sexton, of uec, was a member of the Cable Systems Committee set up by the Department of Communications last year. He sugggests "all the major cities in Ireland are ready and waiting for satellite TV. Dublin may take a little adaptaation, as the cable lines there are older, but this can be overcome. One large receptor dish would serve a city the size of Cork."

Dublin Cable Systems, a whollyyowned and extremely profitable, subbsidiary of RTE have roughly ninetyyeight per cent of the cable business in this country. If RTE take a satelllite channel, the station will be very well placed to collect the extra reveenue generated by the new cable acctivity.

This factor may well be an imporrtant argument in persuading the station's management to take the satellite option.

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TELECOMMUNICATIONS

IN THE WAVE OF EXCITEMENT 'which dominated media coverage of the Atlantic project, television was given the bulk of attention. Yet seventy-five per cent of the Atlantic Satellite's power will be taken up distributing telecommunications data.

Besides the five TV channels there are twenty-eight fixed frequencies that will be able to carry communiication' data - telephone lines, priivate telecommunications, and, nootably, computer information - bbtween the USA and Europe. The trick is that multi-nationals with bases on both sides of the Atlantic willvbe able to swopinternal coni~ pulet information privately.

Take for example IBM which might lease a frequency. If it does IBM London will be able to swop cOInp!:!ter iJ.1formation with IBM New

York and vice versa. It is believed that this is where Atlantic is going to make its money. Television is a more exciting and high profile medium but it could be seen as a secondary facility of the Atlantic Satellite.

The market for the frequencies is unlimited. Every major banking organisation in the world is a potenntial customer. The point here is that Atlantic are thinking of London. Atlantic expect the British will not have a similar facility in space by the time the Atlal1tig satellite goes up. If this is true Ail~~tic will corner the market in telecomrtmnications, between New York !lind London; which goes a Iong way towards exxplaining why Atlantic are investing £300 million in the project.