Bell Broadcast and New Media Fund faces 40% cut as a result of CRTC decision

Reaction has been swift and condemning to news that the Bell Broadcast and New Media Fund (Bell Fund) faces a 40% cut to its budget for assisting new media production in Canada - the result of a recent CRTC decision (CNM Update, July 17/03). Just days after announcing it would begin putting more money into projects, the fund’s staff is now scrambling to find ways to maintain funding without cutting the number of projects it can help. In response, the Bell Fund has written to the CRTC asking it to reconsider the dramatic effect of the cut. In a missive to CRTC chair Charles Dalfen, Bell Fund chair Paul Hoffert writes: "Needless to say, this huge cut to the Bell Fund’s financing will have a major impact on this sector of the industry…This is no ‘modest, short-term effect’. This is not funding that’s replaceable. A $3.6M cut to the CTF (which has other sources of funding to offset this), is a 2% cut to the CTF. "Productions that have received CTF funding often rely on the Bell Fund to complete their financial structures. This will no longer be possible for a significant number of projects that count on Bell Fund support. The impact of your decision cannot be underestimated. This is particularly difficult to understand when DTH companies already contribute significantly more on a percentage basis to the CTF than cable (4% of gross revenues vs. 2.6%). Why have you diverted much-needed new media financing dollars to the support of local television programming?" In its letter, the Bell Fund points out that the amount of money expected to be diverted from new media into local programming could be well above the $3.6 million estimated to be necessary by the CRTC. The fund asks whether the commission would cap contributions to that amount. Andra Sheffer, executive director of the Bell Fund, confirms that the fund is facing the 40% reduction in contributions from satellite TV operator Bell ExpressVu LP as a result of a CRTC decision to create a new local programming fund. The new fund is to be a carrot for allowing Bell ExpressVu to distribute more local television channels from other cities into various markets - over the objections of the Canadian Association of Broadcasters (CAB) (CNM Update, Jan. 15/03). A deal reached between the CAB and Bell ExpressVu last October would have seen the satellite TV operator divert 2% of its gross revenues to an independently administered fund for local and regional programming instead of to the CTF. At the time, the formula appeared to change Bell ExpressVu’s ratio of contribution payments to 2% of revenue for the CTF, 2% for the new local programming fund, and maintained 1% for the Bell Fund. However, in Broadcasting Public Notice 2003-37 released July 16, the CRTC rejected the plan to divert any funds from the CTF and instead mandated that 0.4% of revenues be contributed to the new local programming fund and 4% of revenues to the CTF, which leaves only 0.6% of revenues available for the Bell Fund instead of 1%. Sheffer tells Canadian NEW MEDIA that the changes, which are effective immediately, will reduce the money available to the fund from about $7.5 million this year to $6 million. In the next full year, that figure will likely fall to $4.5 million. The timing for the CRTC’s move likely couldn’t have been worse. Earlier this month, the Bell Fund announced sweeping changes to the fund’s guidelines, which would see more cash put into winning projects without affecting the number of projects that could be funded. Sheffer says changes to the fund were made in response to market imperatives, and are unlikely to be reversed despite this blow (CNM, July 11/03). "In a way, we’re still kind of happy that we did that when we did do it, because we believed that what we did is in the best interests of the industry - that this is what’s needed to make this industry grow. We’re not going to change. We increased the caps and the percentages and I think those are all done for the right reasons. "We had expected, though, that that wouldn’t impact on the number of projects. Now it will impact on the number of projects." Asked what can be done to counter the effects of the CRTC decision, Sheffer says the fund is looking at a number of alternatives. "We may revisit our mandate. We had hoped to do research and training, and international marketing. Those are probably the kinds of things that will be put on hold for a while." She adds that it is too early to determine how many fewer projects will be funded as a result of the lower contributions. Response to the proposed CAB-Bell ExpressVu deal from new media producers was mixed during the CRTC process - Broadcasting Public Notice 2002-57. Halifax’s Collideascope Entertainment, for example, opposed the plan to divert money from the CTF. Others, such as Tyndal Stone Media Inc., SNAP Media Corp. and DECODE Entertainment, were seeking assurances from the CRTC that the Bell Fund wouldn’t be touched. It’s uncertain whether any portion of the CRTC decision can be reversed. Bell ExpressVu should be happy overall with the commission’s decision since it will now be able to offer more local TV channels to its 1.3 million subscribers without having to pay into the new local programming fund with revenue not already spent on either the CTF or Bell Fund. Sheffer notes, however, that Bell ExpressVu executives have already expressed their disappointment that the deal would have such unintended consequences as a 40% reduction to the Bell Fund. Failed balancing actAn appeal to the federal Cabinet may be possible, but looks unlikely in a decision so otherwise favourable to the satellite TV company. Sheridan Scott, chief regulatory officer for Bell Canada, says it’s too early to tell whether some of the funding might be restored. But she confirms disappointment at the impact of the CRTC’s decision on new media. "New media is a growth strategy for broadcasters and so I think it’s unfortunate that you have a reduction in funding to the new media sector that might be one of the implications of this decision," she tells CNM. "It’s a very complicated area with a lot of stakeholders and trade-offs between the stakeholders. I think the commission has made a good effort to balance the broadcasters, the DTH providers, and the consumers. The new media sector, though, is not included in the balancing act." Scott adds: "The impact on the new media fund was certainly not something that we expected…It’s difficult for us to understand the commission’s thinking, other than that they wanted to keep the CTF whole - and I can understand their preoccupation there…It’s difficult to understand why the commission decided that that was an appropriate trade-off."

Bell Broadcast and New Media Fund faces 40% cut as a result of CRTC decision

Broadcast | July 24, 2003

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