CAB opposes request to have contributions to local TV fund lowered

The Canadian Association of Broadcasters (CAB) is expressing its "strong objection" to a request that the CRTC lower the amount of money that Star Choice and Bell ExpressVu pay into its local TV programming fund. Four independent production funds – the Bell Broadcast and New Media Fund, the Shaw Rocket Fund, the Canadian Independent Film and Video Fund (CIFVF) and the Harold Greenberg Fund – that have had money diverted from them to the Small Market Local Programming Fund want the regulator to mandate that the two direct-to-home (DTH) satellite distributors pay 0.27%, not the current 0.4%, of their revenues to the new fund. But the CAB says the money is better left in the local TV programming fund, and in a May 30 letter to the CRTC, the association says the fund it administers should be enhanced, not diluted. Responding to the request by the four independent funds, CAB senior VP Wayne Charman notes that the CAB’s objections to a change in the small market TV funding formula are based on procedural and substantive grounds. He tells Canadian Communications Reports that the Bell Fund et al can "file all they want," but that the initiative to change those conditions, since they are imbedded in the conditions of licence of both Star Choice and Bell ExpressVu, must come from the satellite TV distributors themselves. "It’s not a simple matter of four parties filing with the commission saying, ‘Recalculate the formula.’ It doesn’t work that way," he says. Charman states that neither Bell ExpressVu nor Star Choice have a compelling reason to undergo a lengthy process to modify their conditions of licence to allow the change, especially since the agreement that set up the small market fund expires next summer. At that time, it is expected that the CAB will push for more compensation from distributors, and also a strengthening of the small market TV fund. "There is no mechanism by which a third party can apply to amend a broadcasting licence held by another licensee," Charman notes in his letter to the CRTC. "Equally importantly, however, the CAB takes great exception to the implicit assumption in the Funds’ letter that the four independent funds participating in this request are somehow more worthy recipients of funding than is the provision of local programming in a number of smaller markets across the country." The CAB reminds the CRTC that both it and the federal government have made local TV programming a priority (CCR, April 8/05). "Are they saying we’re not important?" asks CIFVF executive director Robin Jackson. "How can I fight that? Everybody says they are important." She points out that since Star Choice began diverting its programming contributions to the local TV programming fund, the DTH operator’s assistance to the CIFVF has fallen to $100,000 a year from $782,000. "It was a huge (hit) for us because we’re a very small fund," she notes. Bell Fund executive director Andra Sheffer estimates that the Bell Fund has taken a $3.5 million hit. The CAB reiterates to the CRTC that the importance of the small market fund cannot be overstated. "It some markets it has allowed television stations to maintain a level of local programming that otherwise could not be justified; in other markets it has given the television broadcaster the means to improve the quality of its locally produced programming; in still others it has provided the broadcaster with the resources to extend its local presence," writes Charman. "I think it’s critical," concurs Midwest Television VP of finance Glenda Spenrath. Midwest received $990,992 for its two stations in Lloydminster from the fund last year (CCR, May 30/05). She says the funding helps Midwest stay atop of technological changes to continue creating local TV programming in the face of audience fragmentation. "It’s difficult to be at the leading edge technology wise when our revenues are being eroded," she notes. "It’s being able to technologically keep up to speed and also to increase the quality and soon-to-be quantity of our programming. We’re looking at doing more (local) news come fall." The drive to have the local TV programming funding formula changed is being spearheaded by Sheffer on the basis that Bell ExpressVu and Star Choice paid about $1.7 million more to the Small Market Local Programming Fund than the CRTC had calculated. The CRTC allowed the two satellite distributors to lower the 1% of their revenues that they each contributed to private funds to 0.6%, and to pay the difference to the newly established local TV fund as part of their compensation for not having to perform simultaneous substitution on the out-of-market TV signals they distribute to viewers (CCR, July 31/03). In the ruling that provided for the creation of the local TV programming fund, the CRTC stated that the fund should be valued at about $3.6 million, an allocation that was based on 50% of the $7.3 million spent on local TV programming in 2002 by the 17 independent station eligible to tap into the fund. Because the contribution formula is based on a percentage of revenues, the two DTH operators actually paid $5,984,413.38 from July 16, 2003 to August 31, 2004. Adjusting that amount to $5,319,478 for a 12-month period, the Bell Fund and the three others who fired off the letter to the CRTC want the difference of about $1.7 million redirected back to them. But the CAB responds that "clearly the commission understood and intended that, as the DTH subscriber base and corresponding revenues continued to grow, the funding available to finance the small market fund would also grow in lockstep. This approach addresses the fact that, as DTH penetration increases, the negative impact on local television broadcasters due to the importation of distant signals also increases." There is no requirement for the stations to report to the CRTC on how the funding from the local TV programming fund was used.

CAB opposes request to have contributions to local TV fund lowered

Broadcast | June 8, 2005

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