This morning, the RTÉ Authority will wrestle with yet another set of cost-cutting proposals, writes John McManus.

A "For Sale" sign now looks set to join the state of permanent crisis which has hung over RTÉ's Montrose headquarters for the past few years. This morning, the RTÉ chairman Mr Paddy Wright and other members of the RTÉ Authority will consider yet another set of proposals aimed at returning the national broadcaster to profitability. Further job cuts and the disposal of all or part of its Dublin 4 head office site are reported to be among the suggestions put forward by consultants KPMG and Logical Strategy.

The proposals will follow cutbacks of £23.4 million (€29.7 million) and 150 jobs announced in November. These cuts were meant to limit the company's losses for this year at €20 million. To accomplish this would represent a significant achievement considering the €38 million deficit RTÉ incurred last year.

Like all commercial media organisations - not least The Irish Times - the national broadcaster has been hard hit by the fall-off in advertising revenue that accompanied the abrupt demise of the Celtic Tiger last year. However, RTÉ was in difficulties even before the economy started to slow down and, despite making several determined efforts to address its problems, has yet to turn the corner. It lost £17 million in both 1999 and 2000, when the boom was at its zenith.

Despite these losses, RTÉ is still cash rich, with some £100 million held in gilts and other short-term investments, according to the 2000 accounts. RTÉ has always factored this money out of any assessment of its financial prospects. The argument put forward by the RTÉ management was that reserves should not be used to meet operating losses on an open-ended basis.

Some of the cash - which represents the proceeds of the sale of its stake in Cablelink in 1999 - was earmarked to cover the cost of a restructuring package put forward in 2000 that would have shed 400 jobs and returned RTÉ to profitability. For this plan to have worked, RTÉ would have needed a £50 rise in the licence fee. It was only granted a £14.50 rise. This setback, coupled with the fall-off in advertising revenues last year, underlies the losses that led to the appointment in January of KPMG and Logical Strategy. Their brief is to look at various proposals which could return RTÉ to breakeven by 2005 in the absence of another licence fee hike.

The decision not to factor in a licence fee increase seems a little odd. It makes it inevitable that the process will be characterised as part of an elaborate bluff aimed at wringing a licence fee increase out of the Government. Some of the more politically unpalatable measures that are apparently being considered, such as exiting programme production, give this view some weight.

RTÉ management would argue that they are just being realistic. The Government decision to award them only a £14.50 increase was based on the advice of external consultants PricewaterhouseCoopers. They concluded that the station had failed to make a convincing case for a £50 increase. Their view was that £14.50- a 29 per cent increase - was the amount required to ensure RTÉ's continued viability and that any extra could not be justified, particularly given the unacceptably high cost base of the national broadcaster.

The sub-text to the consultants' conclusion was that RTÉ should once and for all address its cost base through a major restructuring rather than seek more public subsidies. Although RTÉ has taken steps to address the issues raised by PwC, the Government has said it will not review the licence issue until 2003 at the earliest. It would be less than prudent to assume that the next Government will be any more sympathetic than the present regime.