Legislation introduced in 1990 which placed a cap on RTE's advertising revenue was a mess, Mr James Stafford told the Flood tribunal yesterday.
Mr Stafford and Mr Oliver Barry met the minister for communications, Mr Ray Burke, in December 1989 to tell him Century was in serious financial difficulties and that this was caused by RTE's dominance in the market.
In July 1990, legislation was introduced in the Dail which limited the amount of revenue RTE could generate from advertising, but Mr Stafford said yesterday the legislation did not address Century's problems.
"With the benefit of hindsight, the solution was not as well thought out as it should have been . . . it was a mess. It was done with the best of intentions but was not what should have been done," he said. Mr Stafford added that the cap on RTE's advertising revenue should have been phased in over a period of time. This was a method RTE also favoured.
"It was capped in theory . . . RTE ignored the cap," Mr Stafford said. He said RTE continued to generate revenue in advertising and ignored the legislation. The legislation stipulated that if RTE exceeded the revenue limit during one year, the advertising revenue for the following year would be reduced by the exceeded amount.
But RTE exceeded the limit by £28 million and to reduce the following year's revenue by £28 million would have meant there would have been effectively no advertising, the tribunal heard.
Mr Pat Hanratty SC, for the tribunal, earlier referred to an internal Bank of Ireland memo on Century's financial situation. It said Century had blamed its problems on "an aggressive price-cutting war by RTE" but that in fact its listenership figures were below those forecast.
Mr Stafford said the problem lay in the low level of coverage its transmission signals were getting throughout the State.
Mr Hanratty asked Mr Stafford about funding which had been reduced by Century's shareholders from £2.5 million to £2 million. He said the chief executive of Century, Mr Michael Laffan, was concerned about the lack of funding and subsequently left.
"Is it possible that rather than investing further you opted for a different option which was to have RTE's revenue capped?" Mr Han ratty asked. Mr Stafford replied that from a businessman's point of view, without a level playing pitch with RTE they were not going to put more money into the company.