Producers, broadcasters upset with CRTC fund related to DTH licence amendments

Both producers and broadcasters have condemned a recent CRTC decision to allow direct-to-home (DTH) satellite TV distributors to divert 0.4% of revenues currently going to independent production funds to a new local programming fund. The $3.6-million local programming fund is part of a deal that was modified by the CRTC in granting Bell ExpressVu LP and Star Choice Communications Inc. licence amendments that exempt them from having to delete signals when distributing out-of-market TV channels (Broadcasting Decision 2003-257 and Broadcasting Decision 2003-258). The Canadian Film and Television Production Association (CFTPA) fired off a letter to CRTC chair Charles Dalfen on July 23, asking the commission to review "at the earliest possible date" its July 16 ruling on out-of-market TV signals. The reasoning for the decision along with dissents by three CRTC commissioners are contained in Broadcasting Public Notice 2003-37 (CCR, July 17/03). The CFTPA asks the CRTC to ensure that the new local programming fund "does not cause unintentional harm to the private independent funds," including the Bell Broadcast and New Media Fund, supported by Bell ExpressVu, and the Shaw Broadcast Television Fund, Astral Media Harold Greenberg Fund and the Canadian Independent Film and Video Fund, all three of which are supported by Star Choice. "We are concerned that in its laudable efforts to protect the CTF (Canadian Television Fund), the commission may have overlooked the considerable impact of this decision on these other funds," CFTPA acting president and CEO Guy Mayson said in a media release. "We hope that they will take a closer look at the funding formula for the new local programming initiative and consider other options." Bell Fund chair Paul Hoffert has also written the CRTC, asking, "Why have you diverted much-needed new media financing dollars to the support of local television programming?" Under a deal worked out between the Canadian Association of Broadcasters (CAB) and Bell ExpressVu, the satellite TV distributor proposed diverting half of the 4% it currently pays to the CTF toward a new $12-million local programming fund (CCR, Oct. 10/02). But the CRTC decided to protect the CTF, and instead allow it to spend 0.4% of the revenues it contributes to other independent funds to an annual $3.6-million local programming fund. The $3.6 million represents half of the $7.3 million paid by 17 small conventional, independently owned stations on local programming in 2003. That means that funds such as the Bell Fund could be cut by 40%. The CFTPA asks the CRTC to review the revenues and subscriber numbers of the DTH operators for the fiscal year ended August 31, and put a dollar cap on their contributions to the local programming fund. The cap could result in less than 0.4% being diverted to the new local programming fund, particularly if DTH revenues continue to grow. According to Sheridan Scott, chief regulatory officer for Bell Canada, talks are now ongoing with the CRTC over the figures. "We’ve had some conversations with the commission to see if the facts and figures that resulted in the 0.4% calculation are appropriate and correct. So, I’m hoping we can continue this dialogue with the commission," she tells Canadian Communications Reports. "(The commission’s) intention appears to be to cover off with these redirected funds 50% of the costs of local programming by independent small broadcasters. So it’s just a question of doing the calculations… We’d have to look at whether 0.4% of our revenues are equal to half the costs (spent on local programming) from this year. That’s the calculation that seems to be a bit off. It could be that our revenues are growing faster than their costs of local production, in which case you would be overcompensating them (if the commission was intending to give them 50%)." Stephen Stohn, a producer with Epitome Pictures, calls the CRTC decision disappointing and troubling. "We have nothing but the hugest admiration for (CRTC chair) Charles Dalfen. I mean he’s an incredibly bright man, and we had been incredibly hopeful that some of the past CRTC decisions, including the Canadian content review, which in our view has been proven to be wrong in some ways - that these kinds of decisions would not be taken in the same way in a sort of an anti-content way. Now, this isn’t anti-content; I’ve gone too far in saying that because it is kind of choosing the CTF over other forms of assistance. But I think consultation is very important, and I don’t think that full consultation was there." Stohn says Epitome’s Degrassi.tv web site would not have been possible without funding from the Bell Fund. "We believe that we have the figures there to make these sites more self-supporting. But in the meantime, it’s very important to keep them active, and support is needed." The commission reduced the amount of the local programming fund from that proposed by the CAB, and also restricted the broadcasters who could access it to independent, locally owned stations. That caveat has angered the CAB, which was hoping small market broadcasters affiliated with networks would also benefit. "But the question that we believe remains entirely open is what are the solutions for local and regional programming in other markets, both small, medium and large, irrespective of the ownership groups that owned the stations in those particular markets?" asks CAB president and CEO Glenn O’Farrell. "We feel that the decision while it’s helpful to small independent market broadcasters, it did not in our mind resonate with the pronouncement of the past of the CRTC that said time and time again that local private programming and local private broadcasting was one of the cornerstones of the system," he tells CCR. "I found it interesting that chairman Dalfen referred to protecting the (CTF) in a report I saw in the media. Had that been the issue at hand, one would have expected that the commission would have said we intend on rolling back cable’s ability to take 2% of its revenues and put it to a cable channel because that is money that is not contributed to the fund. …And if we do believe as we continue to believe that there should be funding to local and regional programming, why not give both BDUs (broadcast distribution undertakings) an opportunity to contribute to that cause?" An example of a broadcaster that has fallen through the cracks with the fund as established by the CRTC, according to O’Farrell, is Radio Nord Communications, which operates the TQS affiliate in Gatineau QC. Although Radio Nord is operating in that smaller francophone market, it is excluded from being eligible for the local programming fund because it is not considered an independent station. Not surprisingly, the DTH operators are not opposing the decision, as they are not required to come up with new revenues for the local programming fund in exchange for not having to perform simultaneous substitution on out-of-market TV signals. "The commission had a complicated balancing act to carry out," Scott says. "It was looking at the interests of local broadcasters, consumers and ExpressVu itself. Given the difficulty of balancing those interests, it did quite a good job of trying to find the right solution. The unfortunate part of the decision is that the Bell Fund has been affected and we were surprised that was the outcome. That certainly wasn’t the proposal put before the commission." The two satellite TV operators will also be required to each pay 20 cents per month per DTH subscriber to small market broadcasters if they don’t carry their local signal, and 25 cents per month for every DTH subscriber who purchases a second set of U.S. 4+1 signals. The satellite TV distributors will also carry more Canadian local or regional stations, and won’t distribute more than two sets of U.S. commercial networks.

Producers, broadcasters upset with CRTC fund related to DTH licence amendments

Broadcast | July 31, 2003

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