Wednesday, 10 May 2017

The Irish Times: Virgin Media warns it will not pay for access to RTÉ channels

Story from The Irish Times:

Virgin Media Ireland has insisted it will not pay for access to RTÉ channels and that RTÉ benefits commercially from occupying the top channel positions on the Virgin platform.

“What we will not wish to do, now or at any point in the future, is pay for access to RTÉ’s content or have our customers in effect subsidise RTÉ’s fulfilment of their public-service remit,” Virgin Media Ireland chief executive Tony Hanway told the Mediacon summit in Dublin.

The remarks are a shot across the bow of RTÉ, which in recent years has lobbied the Government to remove legislation that states Irish free-to-air broadcasters “must offer” their standard-definition channels to pay-TV operators and prevents them from receiving payments known as retransmission fees in return.

Mr Hanway suggested that the cost of retransmission fees, should they be allowed, would be passed on to customers by Virgin, which owns TV3 Group.

“While we recognise the importance of state broadcasters for any society, we strongly believe their cost structures should not be subsidised by the private sector or indeed involve further surcharges on our customers,” he said.

Free-to-air broadcasters in both Ireland and the UK have argued that because their channels are the most-watched ones on pay-TV platforms, those companies have built large-scale subscription businesses on the back of their content without paying for it.

However, pay-TV companies argue that their platforms help those channels reach a wider audience and allow them to amass higher advertising revenues.

Virgin Media said it was not required to give RTÉ One and RTÉ Two the best channel positions on its electronic programme guide.

“We voluntarily choose to give RTÉ’s TV channels top position on our platform,” Mr Hanway said.

“This is of major commercial benefit to RTÉ as it means they can maximise audience reach and the sale of advertising to ad agencies.”

The Virgin Media boss also noted that RTÉ received in the region of €180 million a year from the licence fee, which he described as “a very helpful start to any financial year”.

Sky has also counter-lobbied against the potential introduction of retransmission fees, with the lobbying register showing that chief executive JD Buckley wrote to Minister for Communications Denis Naughten on the topic last year.

Reform of the “must offer” part of the Broadcasting Act was not on the list of amendments put forward by the Minister this week, however it is understood that legislative changes that would allow for retransmission fees have not been ruled out.

A report commissioned by RTÉ from London-based media consultancy Mediatique concluded that if the two big pay-TV operators, Sky and Virgin, no longer carried RTÉ’s channels, it would hurt them more in revenue than the consequent loss of advertising would hurt RTÉ.

The Mediatique report suggested RTÉ should be able to charge “fair” sums of €19 million to Sky, the bigger of the two, and €11 million a year to Virgin.

In the UK, commercial broadcaster ITV believes the passing of a new Digital Economy Act will eventually pave the way for free-to-air broadcasters to charge retransmission fees, following the withdrawal of a key copyright provision that allowed online platforms to retransmit free-to-air channels without payment.

ITV, which is 9.9 per cent owned by Virgin’s parent Liberty Global, is now fighting to be allowed seek retransmission fees for its flagship channel from cable and satellite operators, including Virgin Media.

But although the copyright provision was removed, ITV and other free-to-air channels remain bound by the “must offer” rule that prevents retransmission fees, and the British government last year sided with platform operators on the issue.