RTE has recorded a surplus of £5.94 million for last year, slightly down on 1997. The deficit on operating its broadcasting business is na Gaeilge - has jumped by £2 million to £5 million.

This has led the RTE authority chairman, Prof Farrell Corcoran, to renew his call for an increase in the TV licence fee to bolster the company's finances. The overall surplus for last year was 2.2 per cent down from the 1997 total of £6.1 million. However the breakdown shows significant changes.

The surplus on publications - including the RTE Guide - and other commercial interests increased from £7.2 million in 1997 to £8.65 million last year, reflecting the benefits of the strong economy.

However, Prof Corcoran points out that the underlying deficit in RTE's core broadcasting activity has grown throughout the 1990s and warns that the transition to digital transmission will further increase costs.

Figures in the annual report show that the group calculates that the operating deficit from its contribution to TnaG last year was £5.7 million, compared to £5.8 million the previous year.

The station has subsequently been rebranded as TG4.

The operating surplus on other broadcasting fell from £2.7 million in 1997 to just £621,000 last year, reflecting the rising costs of television programming due to increased broadcasting competition.

While revenue from commercial income is buoyant, "revenue from public funding certainly is not", according to Prof Corcoran.

Three "relatively small" adjustments in present licence free arrangements "would produce significant increases in revenue for investment in new home production strands", he says.

These are an indexation of the licence fee, a real reduction in evasion rates and a "radical decrease in the unacceptably high cost of collecting the licence fee".

Prof Corcoran warns that if these changes are not made, "the currently unfavourable ratio between public and commercial revenue will deepen, with detrimental long-term consequences for the health of broadcasting that is truly public service and truly Irish".

Last year, the revenue derived from the licence fee was £63.3 million, an increase of just over £2 million on 1997.

The annual report shows that overall revenues increased to £188.5 million last year from £176.96 million the previous year. With operating expenses rising more sharply - from £172.8 million to £185.1 million - the organisation's overall operating surplus dropped to £3.4 million, from £4.1 million. The figures show that Tara Television, which provides RTE and other programmes to the British cable industry, is losing heavily, with the organisation taking £972,000 into its accounts for its share.

As RTE only owns 20 per cent of Tara - international group UPC is the main shareholder - the figures suggest that its overall losses last year exceeded £4.8 million RTE invested a further £750,000 in the station last year.

Overall employment in RTE was 2,165 people last year, up from 2,092 the previous year. Total employee costs rose to £69.9 million from £66.4 million.