RTE WILL use the loss of Coronation Street, its flagship entertainment programme, to press the Government for a large increase in the television licence fee. The State broadcaster was already set to ask for a £40 increase before the announcement yesterday that the popular soap opera will move to TV3 from January.
The shift in channels is part of a £38.05 million deal in which Granada Media - which makes Coronation Street - will pay £24.3 million in cash and assume £13.75 million in debt in return for a 45 per cent stake in the independent Irish channel.
Mr James Morris, who founded TV3 more than 10 years ago, will receive approximately £3 million, while the two other founders, Mr Ozzie Kilkenny, the show business accountant, and Mr Paul McGuinness, the manager of U2, will receive around £1 million each. They will retain a 10 per cent stake in the company.
The expected loss of advertising revenue linked to Coronation Street, which occupies the top four slots on RTE's ratings, could undermine the financial basis of a radical restructuring plan aimed at returning the station to profitability. RTE lost a record £16.6 million in 1999 and is heading for a £12 million deficit this year. The impact of the loss of Coronation Street will not be felt until next year, but an increase in the licence fee and 330 job cuts have already been signalled by RTE management.
A spokesman for the company confirmed they would be seeking an increase in the licence fee this year but E Authority had not decided how large an increase was justified. The loss of its most watched programme will have to be taken into account, he said.
RTE pointed out yesterday that it is once again the only Irish-owned TV station. It also warned that a significant number of people may now be unable to watch the soap opera. RTE covers roughly 98 per cent of the population while TV3 reaches only 92 per cent, despite using RTE's transmission network.
Mr Morris said that TV3 is an entirely Irish operation employing 200 staff. He added that the number of people unable to watch Coronation Street after January will be very small as many areas that do not get the station at present are being connected by cable and microwave networks.
The Minister for Arts, Heritage and the Gaeltacht, Ms de Valera, said yesterday the Granada investment was a matter for the Independent Radio and Television Commission, which has to approve it. The deal will put pressure on the Government to expedite the Broadcasting Bill which will give RTE greater financial freedom.
Lack of commercial flexibility and not money cost RTE Coronation Street, according to Mr Steve Morrison, the chief executive of Granada Media. "We had a very good relationship with RTE who were keen to partner us but, given their status, they were not able to invite us into the equity of the channel," he said.
Under the proposed legislation RTE will dispose of its transmission network, retaining a 28 per cent stake. The purchaser of the network will be obliged to upgrade it to carry digital channels of which RTE will be awarded a guaranteed number.
RTE's efforts to secure a licence fee increase will be framed against the backdrop of record domestic inflation.
The Government is unlikely to be receptive to the RTE Authority's pleadings until next year at the earliest when inflation is expected to fall.
