Media&Marketing:It's an odd feature of the media landscape that while consumers have got used to a variety of free media - websites, radio, Metro - they're also prepared to pay large amounts for media they want, such as cable or satellite TV.

There is only one medium people have no choice about paying for and that's RTÉ. The licence fee, currently €158 per annum, brought in €183 million for RTÉ last year. So where does all the money go?

The justification for the tax has always been that it is to fund public service broadcasting. The problem with the licence fee is that it is regressive - it takes no account of the individual's ability to pay. The State gets around this by paying the fee for pensioners and certain categories of social welfare recipients.

For some poor people, though, finding the €158 is such a struggle that they end up in court, are fined €635, can't pay or won't pay and are sent to jail. There have been 18 such hard-luck cases so far this year.

RTÉ's television and radio stations are crammed with ads. The company's annual report shows that commercial income last year amounted to €222 million - €64 million more than the revenue recorded in 2002.

In the same five-year period, RTÉ's costs have increased by €133 million. Happily, fee revenues have grown by €68 million in the same period, bridging the gap between RTÉ's advertising income and its ballooning overheads.

Some of the licence fee goes to subvent such non-commercial activities as the symphony orchestra and Irish-language radio and television stations.

Licence fee income also pays for minority-taste programming that wouldn't get made were it not for the subvention. However, most of the licence fee pays for prime-time programming.

RTÉ's annual reports states that "the greater proportion" of its programming are public service activities. This means that just about the organisation's entire output - with the exception of 2FM and programmes bought in from overseas - are classified as public service. All the news bulletins, chat shows, GAA matches, Podge & Rodge, Fair City, Winning Streak, Celebrity You're A Star, Premier League soccer qualify for licence fee support on the basis that they are for the greater good of the nation.

The issue of the licence fee subsidising sports output is particularly contentious for TV3, RTÉ's commercial rival. Some of this cash was used by RTÉ to muscle aside TV3 for the rights to broadcast Champions League games last season. Without RTÉ's interest, the same matches could have been viewed on TV3 at no cost to the taxpayer.

Through 2006, RTÉ's payroll overhead expanded by 14 per cent. The annual reports states that the average number of full- time, part-time and casual employees during the year was 2,239 and the year-end number of "full-time equivalent" staff was 2,061. Using that figure, it emerges that the average annual salary and pension paid to RTÉ's employees was €70,600, an increase of 11 per cent on 2005.

Since 2002, when there was a big hike in the licence fee, the fee has been pegged to inflation, but RTÉ may soon be asking for a bit more. That's because the Revenue Commissioners has come to regard the licence fee as just another form of revenue for a commercial organisation. Though RTÉ declared a pretax profit for 2006, as usual it ended up paying zero corporation tax.

This is primarily because the licence fee revenue has been exempt from corporation tax since 1962. However, in November 2006, the Revenue notified RTÉ that fee income would be subject to corporation tax from January 2007. RTÉ has countered that if such is the case, then it wants to continue to utilise past losses to offset tax. And there are a lot of losses to minimise the bill. Auditors KPMG reckon the real trading losses in Montrose over the last 35 years amount to €1.9 billion.

State broadcaster's site leads the way

One RTÉ activity that is not subsidised by the licence fee is the group's publishing arm, which spans the RTÉ Guide, Aertel and the website RTÉ.ie.

The site has 1.56 million unique users who generate 43 million monthly page impressions, according to figures certified recently by the electronic Audit Bureau of Circulations (ABC).

This represents a 50 per cent rise in unique users on last year.

On the ABC count, RTÉ.ie is the most popular site in the country, followed by Ireland.com and Eircom.net. RTÉ.ie increased its revenues by 30 per cent last year though it's not clear if the site is paying its way, as it is accounted for as part of RTÉ's publishing division. According to RTÉ's accounts for 2006, the publishing unit had revenues of €14.5 million last year and costs were exactly the same.