RTÉ had accumulated losses of €1.88 billion at the end of December 2006, according to the company's latest annual report.

RTÉ is hoping to use these losses, which have accumulated since 1962, to offset any corporate tax liability it might incur as a result of the Revenue deciding to begin taxing its licence fee revenue from January 1st of this year.

The Revenue has sought to prevent RTÉ from carrying forward any losses incurred before the end of 2006. RTÉ is challenging this position.

It is understood that the State broadcaster is prepared to take the matter to the High Court and beyond if the Revenue sticks with its current position.

RTÉ increased its financial surplus last year by 10.3 per cent to €10.2 million, following strong increases in its licence fee revenues and commercial income.

RTÉ's television business was the biggest contributor to the surplus, netting the broadcaster €9.5 million. Radio brought in a surplus of €2.6 million and its transmission network earned €5.6 million.

Loss-making business units included news and current affairs, which cost the group €2.6 million, while its corporate headquarters cost €4.1 million.

Licence fee revenue rose by 7.5 per cent to €182.8 million, while its commercial income was up 11.2 per cent to €222.2 million.

That gave the Donnybrook-based broadcaster total revenues of €405 million last year, up from €370 million in 2005.

The €3 increase in the licence fee last year generated an additional €1.9 million in revenues for RTÉ, while the increase in the population here netted it an additional €9.8 million in fees.

In spite of this, RTÉ said 16 per cent of all eligible households did not hold a valid TV licence, double the level that prevails in Britain.

RTÉ's operating costs rose by €33 million to €380.5 million. An extra €19.7 million was spent on indigenous programming, with an extra €1.9 million paid for overseas programmes.

According to the report, director general Cathal Goan received €360,000 in salary, bonuses, pensions contributions and other benefits last year. This was €3,000 down on 2005, when he received a salary arrears payment of €13,000.

Mary Finan, who took over as chairwoman of the RTÉ Authority on February 21st 2006, received a fee of €30,000. Her predecessor, Fintan Drury, who resigned on January 19th last year, earned €2,000.

The authority is expected to submit the second "iteration" of its five-year rolling strategic corporate plan to Minister for Communications Noel Dempsey at the end of June.

The report also shows that RTÉ 2 is now the second-most watched TV channel in Ireland and that 49 of the top 50 most watched TV shows here were shown on RTÉ last year.

The report also notes how TG4 was spun off as a separate entity on April 1st.

The station generated net commercial revenue of €3.5 million in 2006, the same level as the previous year.