The bailout of the Irish media sector (update)

They say a week is a long time in politics; well certainly, two months can be an eternity in media. Just over two months ago, there was a blogpost on here examining the finances of media companies operating in the State and suggesting that they would need an imminent bailout.

Since then, the Thomas Crosbie group has passed through a pre-pack receivership and the future of the Sunday Business Post, now in examinership, remains uncertain as it seeks new investors. The logical tie-up between the SBP and the Irish Times – which doesn’t have a Sunday edition – looked inevitable but this weekend, Tom Lyons is reporting that the Irish Times investment bid might be doomed with its partner, Landmark Enterprises going cool on the enterprise. Minister for Finance Michael Noonan refused to tell us how much had been written off in the receivership/examinership but it was reported that AIB was owed €28m and the betting on here is the debt forgiveness is in excess of €10m.

On Friday last, we had a muddied statement from Independent News and Media which indicated debt forgiveness of €138m from banks including AIB and Bank of Ireland. Funny, not a word about the debt write-off or the atrocious results for 2012, in today’s Sunday Independent. Anne Harris the Sunday Independent editor looks like a rank hypocrite after the criticism the Sindo meted out to rivals which had last year suffered poor results.

We finally found out during the week why RTE has been soft-soaping us with its tendentious interpretation of the  “independent” report from PwC: RTE is set to unveil a deficit of “in excess of €60m” for 2012 and worryingly there was no word on the pension which incurred a loss by itself of €50m in 2011. Unlike private sector media groups that took bets on new enterprises during the boom and funded the bets with other people’s money, RTE didn’t, and its losses are down to a pathetic and incompetent management that has been unable to cut its coat according to its cloth – it pays obscene salaries at one end of the spectrum, and in general looks like a financial basketcase waiting to implode. It is now whinging that Sky is taking €380m of revenue in the Irish market leaving just €420m per annum for RTE, TV3, TG4. It’s called “competition” duckies, and you’ll just need to suck it up.

Meanwhile over at TV3, intensive discussions are presumed to be taking place right now with the Special Liquidator of IBRC to refinance €125m of loans, in a business which is widely believed to be worth only €15m. There has been speculation that a buyer is weighing up a bid for TV3 and that potential buyer is..

UTV has shown that it is the healthiest media group operating on the island of Ireland, or at least the healthiest media group that provides separate accounting for the island. We have preliminary results for 2012 – see above – which indicate the company is healthy enough to actually pay a dividend. Dividend? Yes, we have gotten so used to deficits, losses, bailouts and debt forgiveness, we forget that private companies exist to make a profit for their shareholders.

News International which publishes the Sunday Times and the Sun may be profitable but we don’t have separate accounting. Sky, according to RTE, has Irish revenue of €382m per annum which is presumably profitable. The Irish Daily Mail reported revenues of €19m in 2012 and profit of just over €1m last week.

It is surprising on here that the Irish Times is not suffering more but its main folly during the boom, the purchase of MyHome.ie has largely been written down to a negligible value in the Irish Times accounts. Mind you, the group still thinks its premises are worth €32m and there is a nasty pension liability of €44m and in 2011, the last year for which annual accounts are available, the group made a full recognized loss of €23m, though €21m of that was related its pension obligations. Last October, 2012 Tourism Ireland which comes under the auspices of Minister Varadkar on this side of the Border and Minister Arlene Foster in Northern Ireland paid a stonking €495,000 to the Irish Times for the Ireland.com domain name. Because the Irish Times isn’t burdened with unwisely-acquired enterprises and borrowings, it has been able to adjust to the challenging reality quicker than its rivals on Talbot Street, but if IN&M successfully completes its restructuring, then IN&M’s core business will be financially healthier than the Irish Times’s.

Johnston Press, a British newspaper publisher, which publishes a number of regional newspapers including the Limerick Leader is just as indebted as IN&M and last year turned in a loss before tax of GBP 6.8m (€8m).

Denis O’Brien’s Communicorp continues to teeter on the wrong side of profitability but it is disposing of overseas radio stations and is close to break-even on its operations where shoe-string budgets and obsessional cost control have borne results, though it still is stumbling along under massive debt.

What do the next two months hold for the Irish media landscape? Who knows but here is what the crystal ball on here is suggesting – the print media think their offerings are good enough to allow a limited paywall but the luvvies may be in for a dose of reality when push comes to shove. The Herald, which has become a morning newspaper this year, looks doomed and will either merge with the Independent or the Irish Daily Star. The Independent looks set for a merger with the Sunday Independent. And will the Belfast Telegraph move closer to the Independent? It seems unimaginable that the Sunday Business Post won’t end up with the Irish Times despite the apparent cooling of Landmark’s pursuit of a bid to rescue the title out of examinership. RTE will post a gigantic loss and communications minister Pat Rabbitte will try to put the legislative machinery in place for a broadcast charge, which when collected with the household charge should make an additional €30m available which RTE will need to curtail its deficit.  UTV may take control of TV3 which will be no bad thing for viewers. It’s hard to see the regional newspapers surviving in their present numbers. But, this is all in the realm of the crystal ball.

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Revealed! The league table of our overseas diplomatic missions, analysed by country.

I say “overseas”, but in 2012 we managed to spend €648,614 on a so-called “secretariat” in Belfast and €537,962 in the exotic city of ….Armagh! This week, the Tanaiste and Minister for Foreign Affairs provided details of the €52m cost of running our diplomatic missions across the globe in 2011 and 2012. The results are intriguing, with us spending more in each of Mozambique, Zambia and Uganda than we did in Germany. We spent more in Vietnam than we did in India. And we spent more in Lesotho – small landlocked impoverished mountainous expanse  in southern Africa – than we did in Brazil or Mexico. We spent more in Iran than we did in Latvia. We spent more in Sierra Leone than we did in Cyprus. And 2012 saw the final costs coming in for Vatican City, with that mission controversially closed.

There are a few countries in which we don’t have representation which look like odd omissions – New Zealand, Venezuela, Chile, Jordan, Bahrain, Peru, Colombia, Libya, Pakistan, former Yugoslavian states except for Slovenia, Caribbean countries generally, former USSR countries except for Russia, central America except for Mexico and all of  the smaller Pacific islands.

It should be stressed that the figures EXCLUDE two major expense headings, the cost of diplomats sent from Ireland and the capital cost of buildings and we know that there have been some rebuilding works that have attracted criticism in the past. Hopefully these omissions will be rectified in the near future so that we can get a total picture of how we spend our money on diplomatic missions.

You can see the PQ which revealed the informationhere where there is a split by city and expense heading.

UPDATE: 7th May, 2013. An Tanaiste and Minister for Foreign Affairs Eamon Gilmore has now confirmed the salaries and allowances paid to Irish staff in 2011 and 2012 together with the capital expenditure on diplomatic Missions. In 2012, €20,367,563  was paid in salaries and  €8,709,948 in allowances and €878,604 in capital expenditure.

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Noonan receives 9 written representations from IBRC borrowers as he rules out anti-lobbying laws

If you believe the reporting in today’s Sunday Independent, businessman and developer Paddy McKillen is getting antsy about refinancing his IBRC loans, with a claim that the Special Liquidator of IBRC, Kieran Wallace of KPMG has turned down an offer that would see €179m of Paddy’s IBRC loans, reportedly tied to Jervis shopping centre in Dublin and property in Boston, repaid 100%.

There is no reference to the remainder of Paddy’s loans at IBRC, either his personal loans which in total have been reported to be €300-370m or his corporate loans reported to be €550m. And there is no word on the loans which secure shares on Paddy’s stake in Coroin, the company which controls the three London hotels, the Berkeley in Knightsbridge and Claridge’s and the Connaught in Mayfair. And lastly, it is not clear what a 100% repayment means. You might recall that Sean Quinn at one stage was promising 100% repayment of his billions to Anglo, but such repayment was dependent on fanciful results at Quinn Insurance over five years.

We don’t know what Paddy had in mind, and the Sindo’s reporting stretches credibility to suggest a bank would not accept 100% repayment of a loan. We also know that Paddy’s business rivals, the Barclay brothers, are closely watching Paddy’s IBRC loans secured by his stake in Coroin, and it has been reported that the Barclays are prepared to pay a premium on market values of those loans, presumably to give them a gateway to control of the hotel group. Following the publication of Judge Mac Eochaidh’s judgment last Friday in which the Judge granted the Sunday Times limited freedom to report on Paddy’s affairs, the Sunday Times has today published a story about Paddy obtaining new facilities recently to pay his legal fees. Paddy didn’t make the Sunday Times Irish 250 Rich List last Sunday which had a threshold of just €41m. So, the Barclays will be more-than-ever interested in the Paddy’s IBRC loans.

The report in the Sindo today reminds us that the Special Liquidator of IBRC is presently managing a window of time when loans can be refinanced out of IBRC by the borrowers, and when that window closes the loans will be offered to the highest bidder but at no less than an independent valuation. We saw earlier this week that Minister for Finance, Michael Noonan refused to confirm the value of loans refinanced out of IBRC since 6th February 2013 when he appointed the Special Liquidator and he also refused to confirm that refinancing had been at 100% which is a commitment previously given and which continues to be referred to by the Minister.

We also learned this week that borrowers had been contacting the Department of Finance about their loans, and Minister Noonan said that nine such written representations had been received to date. We don’t know what the Department of Finance did with those representations, but the Department prodded RTE to last week clarify that the Department did not “look into people’s bank accounts”

This is all beginning to get quite murky, and as we have shoveled €35bn into IBRC so far – €34bn up to 6th February 2013 when it was placed in special liquidation and €934m in March 2013 when two bonds were paid under the Eligible Liability Guarantee scheme, we really should know what is happening to our money. And if borrowers are making representations to Government and possibly through the pages of the old media, then shouldn’t we at least have some protection in the form of anti-lobbying rules?

This week, Minister Noonan ruled out anti-lobbying rules for IBRC, rules which already exist in NAMA and which, coincidentally are understood to form part of Paddy McKillen’s case against NAMA launched on Friday in Dublin’s High Court. So NAMA is managing €32bn of assets and is subject to rules which if broken can lead to imprisonment, on the other hand, the Special Liquidator at IBRC is managing €16bn of estimated value assets and all we have is Kieran Wallace’s word of honour. KPMG was the auditor of AIB, Irish Nationwide and Permanent TSB during the boom years, and these three institutions have cost us €30bn in bailouts. KPMG was also around for the balls-up at the Lotto draw two weeks ago.

There is nothing to suggest Kieran Wallace is not honourable, but, nor is there anything that suggests the clean-sleeved employees at NAMA aren’t. Bizarrely, Minister Noonan justifies not extending NAMA’s anti-lobbying rules to KPMG by saying there is just a short window when KPMG will have control of the assets, but the Minister refused to confirm newspaper reporting that the August 2013 deadline for transfer of unsold loans to NAMA, has slipped, and that KPMG may have control of the IBRC assets for perhaps a year.

Paddy McKillen of course was part of the Maple 10, or Anglo Golden Circle given loans by Anglo to acquire Sean Quinn’s stake. There are billions of our assets presently under offer at IBRC, and the last thing we need is for a new golden circle getting privileged access to those assets below market value.

The parliamentary questions and responses from which the information used above is derived are here:

(1) Deputy Pearse Doherty: To ask the Minister for Finance if he will outline the safeguards which exist to prevent the special liquidator at Irish Bank Resolution Corporation from being subjected to improper influence from any quarter including borrowers or Government Departments, in his duties to maximize the value of IBRC assets.

Minister for Finance, Michael Noonan: The Special Liquidators have been appointed for the purposes set out in the IBRC Act 2013 and are subject to the duties and obligations set out in that legislation. In addition the Special Liquidators are also subject to the restrictions and obligations as set out in the Special Liquidators engagement. As accountants, appointed as Special Liquidators, normal professional standards apply to all conduct.

Independent third parties are being engaged to value the loan assets of IBRC (in Special Liquidation).The appointment of independent third parties ensures that the valuation and sales process is managed without improper influence or conflict of interest.

Should a bid not be received that is equal to or in excess of the independent valuation obtained, the loan will transfer to NAMA at the independent valuation price.

(2) Deputy Pearse Doherty: To ask the Minister for Finance if it is appropriate to extend the anti-lobbying rules, which apply to the National Asset Management Agency, to the liquidation of Irish Bank Resolution Corporation..

Minister for Finance, Michael Noonan: The liquidation of IBRC is similar to any other liquidation with the exception that the Special Liquidators have been appointed by the Minister under the Irish Bank Resolution Corporation Act 2013 rather than appointed by the Courts. As such the Special Liquidators are obliged to follow normal Companies Acts priorities throughout the liquidation process and act in a manner that ensures the assets of IBRC are managed in a way which maximises the overall return for all its creditors including the State subject to the provisions of the IBRC Act.

The Special Liquidators are in the process of devising and implementing a valuation and sales process in respect of the assets of IBRC. Any assets that are not sold to third parties for a value higher than the independent valuations will be sold to NAMA at that price. Assets that are transferred to NAMA will be subject to the anti-lobbying rules contained in Section 221 of the NAMA Act 2009.

As the Special Liquidator will only be holding the assets for a short period and the sale is guided in a specified manner, the anti-lobbying provisions were not applied to it. As accountants, appointed as Special Liquidators, normal professional standards apply to all conduct.

(3) Deputy Pearse Doherty: To ask the Minister for Finance if he will outline any representations that he or his Department has received from, or on behalf of, borrowers at the Irish Bank Resolution Corporation in special liquidation, after the announcement of the special liquidation of IBRC on 6 February 2013..

Minister for Finance, Michael Noonan: As the Deputy is aware, representations are received in a number of ways including representations through political representatives, from individuals directly, from legal representatives of clients of the bank etc. These representations are received through a number of channels including mail, e-mail and primarily by telephone contact. The overall number of written representations relating to borrowers of IBRC (in special liquidation) received since the 6th of February total 9.

As a general rule the Department does not become involved in individual cases and will refer borrowers to the bank, to the Central Bank or to the Financial Services Ombudsman etc. as appropriate and depending on the circumstances of the case. It would not be appropriate for me to comment on the content of personal representations that have been received.

(4) Deputy Pearse Doherty: To ask the Minister for Finance if he will confirm when the window in which the Special Liquidator of Irish Bank Resolution Corporation is allowing existing borrowers to refinance their loans 100%, is to expire.

Minister for Finance, Michael Noonan: I have been informed by the Special Liquidators that the window in which Borrowers are allowed to refinance their loans 100% will remain open until such time as the loan is sold in the sales process.

(5) Deputy Pearse Doherty: To ask the Minister for Finance if he will confirm when the Special Liquidator of Irish Bank Resolution Corporation will commence offering loans to the market for sale..

Minister for Finance, Michael Noonan: I have been advised that the Special Liquidators are unable to confirm at this point when the loans of IBRC (in Special Liquidation) will be offered to the market for sale. The loan sales process is currently being finalised.

(6) Deputy Pearse Doherty: To ask the Minister for Finance if it remains the case that the National Asset Management Agency will acquire the unsold remaining loans at Irish Bank Resolution Corporation in August 2013, or if that date has slipped; and if he will make a statement on the matter.

Minister for Finance, Michael Noonan: I have been informed that should a bid be received for a loan that is not equal to or in excess of the independent valuation received, the loan will transfer at the valuation amount to NAMA. Work in relation to the sale and transfer of loans to third parties is on-going. The Special Liquidators are unable to comment at this time as to when this work will be completed.

(7) Deputy Stephen S. Donnelly: To ask the Minister for Finance if he will provide a breakdown of the ELG payments that comprise the €933m provided under the Credit Institutions (Financial Support) Act 2008, as detailed in the March Exchequer; and if he will make a statement on the matter.

Deputy Pearse Doherty:To ask the Minister for Finance if he will provide a breakdown of the €933.775million eligible liabilities scheme payment in the March 2013 Exchequer Statement between senior unguaranteed unsecured bondholders, senior unguaranteed secured bondholders, senior guaranteed secured bondholders, junior bondholders, depositors and others.

Minister for Finance, Michael Noonan: I propose to take PQs 176 and 194 together.

Following the liquidation of IBRC on 7 February 2013, all eligible liabilities covered by the ELG Scheme are entitled to apply for repayment under the Scheme.

IBRC had two bonds which were guaranteed under the Scheme and which had ELG certificates. Both were senior unsecured bonds. During March 2013, the two ELG Scheme guaranteed bonds were repaid in full to the Bond Trustee, for distribution to bondholders. This amounted to a total of €933.775 million.

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The shame! We’ve managed to sell or give away a total of 1,794 Certificates of Irishness

Tom Cruise foisted “Far and Away” on us and we got him back by foisting a “Certificate of Irishness” on him, and if you ever visit at his ranch in Murrieta, California, he’ll have to take it out of storage and hang it on the wall. And he can’t sell it because it’s unique to him with his name printed on it. Mind you, it seems these Certificates might become collector items, because, since the launch of the Certificates in August 2011 – yes, this was a Fine Gael/Labour initiative – it was confirmed this week that just 1,794 have been issued.

There is a dedicated website which promotes the Certificates and a quick review of it shows about a dozen framed certificates being forced on people with a link to Ireland. From President Barack Obama to Tom Cruise, we’ve displayed a staggering lack of tact by foisting certificates on the slow and unwary.

Perhaps in future, we could use these Certificates as diplomatic weapons to embarrass people – maybe doorstep Piers Morgan (born in Banagher, county Offaly) who nurtures a Hugh-Grant image of Britishness in the US; where would Piers be, if he was uncovered as an ordinary Mick. And what about Tory toff, the British chancellor George “Ireland is a friend in need” Osborne whose folks originally hailed from Tipperary and Waterford. Maybe pay him back for claiming the €4bn bilateral loan was just digging us out of a hole, when in fact it is being used to repay British bondholders in Irish banks. What would they say in the Bullingdon Club is they knew George was really a Paddy?

We also learned this week, that it has cost us €3,163 to develop the Certificate of Irishness programme, which equates to €1.76 per Certificate issued. Now, you might think that with Certificates selling for €40 a pop, that we’d be in clover, but it seems we have a deal with the foreign exchange chain Fexco whereby they manage the scheme and keep any receipts. Given the number of certificates we’ve gifted with frames though, you can be pretty sure that Certificates of Irishness have not been a very profitable export.

The serious point to be made, is once Irish people emigrate, they are disenfranchised. For the year in which most recent statistics are available, 87,100 of us left and history tells us, they won’t return. It must fill us with shame to see Poles snaking around the block of their embassy in Ireland so that they can cast their vote. And yet, all we offer our Diaspora is a €40 Certificate of Irishness.

The parliamentary question and response is here.

Deputy Pearse Doherty: To ask the Tánaiste and Minister for Foreign Affairs and Trade if he will confirm the cost of the Irish heritage certificate scheme to date and specifically the amount paid to date to scheme operator, Fexco; and the projected amounts overall to be paid to Fexco to the end of its contract.

Deputy Pearse Doherty: To ask the Tánaiste and Minister for Foreign Affairs and Trade if he will confirm the number of Irish heritage certificates issued to date.                                        .

Tánaiste and Minister for Foreign Affairs, Eamon Gilmore: I proposed to take Questions 156 and 158 together.

With the vast majority of the global diaspora no longer eligible for Irish citizenship, the Certificate of Irish Heritage was introduced to recognise descendents of previous generations of Irish citizens in an official way and to give greater practical expression to the sense of Irish identity felt by many around the world.

Following a public tender in April, 2010, Fexco were awarded the contract to operate the Certificate of Irish Heritage on behalf of the Department.  Under the terms of the contract, Fexco developed the web systems and necessary software. Fexco also process applications, issue certificates and are the initial point of contact for all customer enquiries.

To date, 1794 Certificates of Irish Heritage have been issued.

The Department of Foreign Affairs and Trade has spent €3,163 to date on the Certificate of Irish Heritage.  These costs are mainly on technical issues relating to the websites which the Department owns (registering domains and security validation procedures etc.) as well as travel costs to meetings with Fexco in Killorglin and some photographs at the launch in New York.

No payments have been made to date to Fexco nor are any expected to be made during the contract period.  Under the terms of the contract, the Department is not liable to Fexco for any costs associated with the establishment or operation of the scheme.

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