Bank officials believed Century Radio would be a "lost cause" if legislation was not introduced to cap RTE's advertising, the Flood tribunal heard yesterday.
The enormous financial difficulties faced by the station were outlined by Mr Eamonn Gallagher, area credit manager with Bank of Ireland. "It didn't take much analysis to see that the losses were huge," he said. "Revenue down. Costs up. Everything going wrong," he said. Century Radio went on air in September 1989 but five months later, only 45 of the original 70 staff remained and 10 more were due for redundancy.
Both the chief executive and marketing director had resigned and while Century directors put a positive gloss on this by saying they were saving £200,000 a year because of that, Mr Gallagher agreed the bank was very concerned. He said it "would have taken a miracle" to save the ailing radio station. Mr Gallagher said Century directors Mr Oliver Barry and Mr James Stafford continuously promised them the Government would soon be enacting legislation to cap RTE's advertising. This was expected to divert some advertising spending towards Century Radio. "It was the only window of hope," he said.
Ms Eunice O'Raw, for the tribunal, asked Mr Gallagher how the bank would have viewed the station if there was no promise of this legislation. "I'd say we would have considered it was probably a lost cause if it continued as it was," he said.
He said the legislation was one of the kernel issues relating to the survival of Century.
Mr Gallagher said Bank of Ireland took a heavy hand to the radio station after seeing the true state of its financial affairs at the end of 1989. On January 3rd, 1990, the bank sent a letter to Century directors cancelling an overdraft facility it had offered a week earlier.
That overdraft facility had been offered six days after bank officials and Century directors had a meeting with Mr Ray Burke who was then minister for communications. Mr Burke had told the bank officials he would be introducing legislation to cap RTE's advertising.
Some of the cancelled overdraft facility was later reinstated, but the financial problems continued.
In April 1990, a bank memo noted the bank had been told "in confidence" that Mr Ray Burke had assured Mr Stafford and Mr Barry that, if necessary, they would get permission to reduce their shareholding below 51 per cent to facilitate a sale. The 51 per cent condition had been imposed by the IRTC.
Mr Gallagher told of a deteriorating relationship between Bank of Ireland and the Century directors, with Mr Barry and Mr Stafford growing "quite aggressive" in their meetings with the bank. "I suppose it was understandable if your company is in deep trouble and your friendly bank isn't too friendly," he said.
At one stage, a bank memo noted that Mr Barry had said he was going to make an offer the bank couldn't refuse. Ms O'Raw asked if Mr Gallagher knew what the offer might have been. "I presume they were going to transfer to another bank," he said to laughter from the public gallery.
Asked if Mr Barry and Mr Stafford adopted a grovelling position in their many meetings with bank officials, Mr Gallagher replied "Grovelling is a word I'd never use in relation to that particular issue."
A bank memo written after a Today Tonight programme on Century Radio noted that Mr Barry told bank officials he used his "political clout" to have the cap on RTE advertising introduced.
"What was your impression of Mr Barry's political clout?" Ms O'Raw asked. "It didn't work," replied Mr Gallagher.
The legislation was eventually introduced in 1990 but the ailing station closed in November 1991.
