THE nature of the relationship between Tony O'Reilly's Independent Newspapers and the Rainbow Coalition has been brought into sharp political focus since last week's general election.
This follows the impassioned plea by Toddy O'Sullivan, seen live on television as he lost his Labour seat in Cork North Central: "I'm calling on Dick Spring, as a friend, to do a service to the party and to the country and give his side of the story, to clear the air as regards Independent Newspapers.
The Tanaiste did not respond directly to Mr O'Sullivan's urgings. He did describe the front page editorial in the Irish Independent on the day before the election as "disgraceful and despicable, a new low in Irish journalism". But he sidestepped the invitation to "clear the air" in interviews last weekend.
It has now emerged, however, that Dr O'Reilly and Independent Newspapers brought considerable pressure to bear on the Rainbow Government in pursuit of their commercial interests.
Last autumn, the Taoiseach was asked personally by Dr O'Reilly to enforce the exclusive MMDS licence granted to one of his associate companies, Princes Holdings. When the Government did not respond to his satisfaction, representatives of Independent Newspapers Plc (INP) threatened the Rainbow Coalition that they would "lose" the group's support "as friends".
These exchanges are only emerging since the Irish Independent called on voters to support Fianna Fail and the Progressive Democrats in the election.
The warning to the Rainbow Coalition last autumn that it would lose the support of the Independent group would have to be taken seriously by any government. Independent Newspapers Plc is in a dominant position in the newspaper market, publishing the Irish Independent, the Evening Herald, the Star, the Sunday Independent and the Sunday World. It has an influential 29.99 per cent shareholding in the Sunday Tribune, and effectively controls it financially. It also owns 10 provincial newspapers.
Matters came to a head between Dr O'Reilly, chairman of Independent Newspapers Plc, and the Taoiseach last August.
Princes Holdings Ltd - in which the Independent group has a 50 per cent joint venture interest with major international partners - was granted exclusive MMDS licences for television transmission seven years ago. An aggregate £65 million was invested in the company.
Dr O'Reilly told the Independent group's agm in May that Princes Holdings had already lost £21 million in providing a service for 125,000 homes throughout their licenced areas. "Contrary to the basic provisions, various Governments did not police the enforcement of their licences in an effective way," he stated.
The nub of the argument made initially by Independent representatives to the former Minister for Transport, Energy and Communications, Mr Michael Lowry, was that they could not get a return on their investment unless the Government closed down the illegal operators and deflector systems.
The Independent's case was made, quite properly, on the basis of a letter despatched by the former Fianna Fail Minister for Justice and Communications, Ray Burke, to Joe Hayes, former managing director of Independent Newspapers, on February 4th 1991, In that letter, which has been seen by The Irish Times, the Minister states: "Immediately MMDS service is available in any of your franchise regions, my Department will apply the full rigours of the law to illegal operations affecting that franchise region. My Department will use its best endeavours to ensure that there are no illegal broadcasting systems affecting that region within six months after the commencement of MMDS transmissions".
The letter marked "Signed and Despd. from Minister's Office" is officially viewed by the Department of Transport, Energy and Communications as a "letter of comfort" to Mr Hayes. But the Government and the Independent group are in dispute about its force in law.
When this matter could not be resolved to the satisfaction of Independent Newspapers, Dr O'Reilly sought a personal meeting with the Taoiseach last summer to address the issue. Mr Bruton met Dr O'Reilly at his summer house in Glandore, Co Cork, on Sunday, August 25th 1996. They discussed the "exclusivity" of the MMDS licences, together with a demand for a ban on below cost selling by British newspapers in the Irish market and reform of the libel laws.
ARRANGEMENTS were made for their representatives to hold a follow up meeting. That key meeting was held on Wednesday September 4th, over lunch in the boardroom of the Independent group's headquarters in Hatch Street, Dublin.
Dr O'Reilly was represented by Liam Healy, chief executive of Independent Newspapers Plc, and Brendan Hopkins, managing director of Independent Communications (International) Ltd. The Taoiseach's representative was Sean Donlon, his programme manager. Mike Burns, the public affairs consultant who is retained as an adviser by Independent Newspapers, also attended.
The specific aim of this meeting was to explore the possibility of a settlement of the MMDS controversy for Dr O'Reilly within parameters which would be workable for the Government.
The feasibility of allowing 20,000 households in Carrigaline, Co Cork, to join the MMDS system at a reduced starting rate was rejected by the Independent representatives, who argued this would lead to households on the same road paying different licence fees.
They raised the question of taking legal action and pointed out that such a case could cost a future administration a lot of money. A compromise could not be reached.
Towards the end of the meeting, the Independent representatives outlined their position. The Government was told it would "lose INP as friends". These words are noted in the Independent's own minutes of the meeting.
The Independent minutes also noted: "We said that large numbers might be at stake and that this surely would not be good for the Government in an election year.
However, the minutes do not fully reflect the tone of the message conveyed to the Rainbow Government. What was reported back to the Taoiseach, after this meeting, was that the representatives of Independent Newspapers warned: "We will mount a full frontal assault on you, as a Government, in the election."
A spokesman for Independent Newspapers declined to comment on the record last night.
On the day before voting in the election, the Irish Independent's page one editorial came to the conclusion: "On any objective analysis, it is a vote for Fianna Fail and the Progressive Democrats tomorrow which offers the better chance of securing our future. We have had decades of a (sic) harsh tax regimes. Let us start to enjoy some payback".
