RTÉ’s capital spending was to be “cut to the bone” in 1987 and a planned new library was among the first casualties.
A memo from an official to minister for finance Ray MacSharry on September 9th said: “I understand that you wish to consider cutting RTÉ’s capital expenditure to a very low level, perhaps to nothing more than contractual commitments.”
If “severe cuts” were required, then the broadcaster’s capital spending should be reduced to £4.5 million, including deferral of the library project.
The note said that cutting further than this, say to £2.5 million, while it was possible, carried certain risks.
"RTÉ will have a sizeable cash surplus in 1988. If they are precluded from investing this in upgrading their equipment etc, it is likely that a substantial portion could be spent on the current side, ie in making more expensive programmes.
“RTÉ have got involved in this sort of thing in the past, with disastrous financial results.”
The memo said the department’s advice from the attorney general suggested that the RTÉ authority “might have legal grounds for resisting further capital repayments if these were coupled with very severe cuts in capital spending”.
Failure to invest adequately would also result in RTÉ “slipping behind other stations in the quality of its output and would limit its ability to turn out home-produced programmes”.
Either of these developments would “in time reduce the potential audience for RTÉ and its revenue-earning ability”.
The note added that RTÉ’s financial performance for most of its existence had been “quite poor” and that it had needed repeated injection of capital from the exchequer.
“The financial successes of the last few years have transformed RTÉ’s position to the point where it can pay back exchequer advances ahead of schedule. In my view, this very welcome development should not be jeopardised, either by extravagant capital spending, or by a failure to invest adequate funds to keep RTÉ successful.”
It was recommended that if the RTÉ library project were deferred until 1989 or later, the remainder of the station’s £5.6 million capital requirement that year could be scaled back to £4.5 million.
This would be regarded as “cutting to the bone” but would still allow spending of £2.6 million on television production facilities.