The decision by broadcaster Pat Kenny not to renew his contract with RTÉ has been described by a senior station executive as "very significant" and "hugely important" in the context of the State broadcaster's overall budget.

RTÉ announced an operating profit of €2.2 million for 2012 yesterday, although it reported a deficit of more than €65 million as a result of one-off restructuring costs. Kenny’s move will see its spend on “top talent“ fall by in the region of €600,000 each year.

"It does matter – it is very significant and any reduction allowing for the tough times that we live in is hugely important," RTÉ's managing director of corporate affairs Brian Dalton said.

Another key figure at RTÉ acknowledged the threat posed to the broadcaster by the rise of billionaire businessman Denis O'Brien's commercial radio stations. Newstalk, which secured Kenny's services this week, is part of Mr O'Brien's Communicorp Group.

Significant
RTÉ Radio's acting managing director Jim Jennings said the financial muscle at stations owned by Mr O'Brien was significant.

“We have to make sure we’re delivering value for money for our audiences, so they can look at what we’re doing and say RTÉ are actually doing a good job when it comes to spending the licence payer’s money.

“Those sorts of pressures have been on us now for a number of years. I don’t think Denis [O’Brien] has those sorts of pressures when it comes to funding his stations.

“He can make these strategic decisions that aren’t based purely on finances. We’re not in that position now. Has the market changed? Maybe the negotiations in and around Pat’s contract are an indication that it has changed,” he said.

Mr Jennings rejected the suggestion that the station would suffer commercial damage in the longer term by the loss of Kenny.