Industry critics – and two commissioners – question need for new $60 million local news fund

A few days after the release of a new policy governing BDUs and discretionary programming services, stakeholders in the broadcast industry have started to ask tough questions about a key proposal designed to boost local programming in small markets. The new fund has also come under fire by two CRTC commissioners, with one warning that such a subsidy will transform industry newsrooms into "permanent wards of the state".Industry executives questioned the commission's rationale behind the new Local Programming Improvement Fund (LPIF) during a panel discussion held today at the Canadian Association of Broadcasters (CAB) annual conference.The CRTC says the fund will help improve local programming, especially news, in smaller markets. It also proposes that BDUs, which are currently required to contribute 5% of their gross revenues to Canadian programming, will see this figure rise to 6%, generating about $60 million in the first year for the LPIF. This money will be raised through a 50-cent charge on subscribers' monthly bills, although the CRTC says it does not expect companies to pass this cost along to their subscribers.In an interview with Canadian Communications Reports, Ken Engelhart, senior VP, regulatory, Rogers Communications Inc., says the CRTC should not have proposed the fund given that there was no input from broadcasters in small markets on whether they needed it."You are creating a program to give $60 million a year to local programming particularly news in small markets, so I would have loved to see some market research. How much do people in these small markets perceive that their news is deteriorating in quality, how much do they perceive that it needs to improve, how much do they want to be paying to that improvement?", he asked, adding that without such input, the CRTC based its decision on an assumption."Nowhere in the public notice of this proceeding was there any question about local news. Of all the pages of evidence that were filed, there were none about this issue, because it was not raised in the public notice."The fund, he says, will result in additional costs being pushed on subscribers, despite CRTC assurances to the contrary.Mirko Bibic, chief regulatory officer, Bell Canada, says money for the fund will likely come from subscribers, adding that the idea was not well thought out by the CRTC."If there was a view that smaller markets needed more local programming, then there should have been more hearings on the issue," he says.But Scott Hutton, the CRTC's executive director, broadcasting, defended the fund, saying that the federal regulator does not expect companies to charge subscribers more. In an address to the conference, CRTC chair Konrad von Finkenstein, said the fund ensures that French-language markets will not be disadvantaged. "We will allocate to them a third of the funding-about $20 million. This will increase their spending on local programming by 46%." English-language stations will receive $40 million, a move that will increase their spending by 33%.LPIF criticized by two commissioners The LPIF has also come under fire from CRTC commissioners Michel Morin and Peter Menzies, who filed dissenting opinions to the October 30 ruling (PN 2008-100). In a lengthy dissent, Morin says the LPIF is "poorly targeted", and that if there was a shortage of local news in specific markets, then the commission should have earmarked new funding solely for news production in those markets. He also questions the fairness of having cable subscribers in lower income Montreal ridings, for example, subsidizing regional news produced for subscribers in Quebec City, where the average income is higher. Likewise, he states, Alberta subscribers may end up subsidizing local news in other Canadian provinces."It is estimated that $10 million of the $60 million LPIF will come from Albertans, but only $2 million, again according to preliminary estimates, could end up supporting local news programming in Alberta's smaller markets. This is purely and simply a case of Albertans subsidizing the rest of the country to the tune of $8 million!," he writes.In his written dissent, commissioner Peter Menzies argues that the decline in local news is a result of ownership concentration and the centralization of operations, and that providing subsidies will stifle the opportunity for others to come up with innovation solutions."We cannot succeed in inspiring the creative abilities and instincts of Canadians or retain their confidence by subsidizing shortcomings and obligations that belong at the doorstep of the Commission and the OTA TV licensees. With great respect to my fellow Commissioners and their acknowledged professionalism, wisdom and dedication, the LPIF rewards and encourages the wrong behaviours and stifles and suppresses the right ones - such as innovation and competitiveness - that are required for Canada's economy and culture to flourish," states Menzies.The CRTC has asked CAB to draft a proposal to administer the fund, which is expected to be operational next broadcast year. Pierre Pontbriand, VP, communications, says it is still too early to comment on when CAB will hand over the proposal, but CRTC spokesman Denis Carmel says the broadcast association has between 60-75 days to complete it.However, many questions still linger about the LPIF, says Ira Wagman, assistant professor in communication at Carleton University. "What kind of programs can that money produce? What constitutes local programming? Those are some of the challenges. Cable companies may decide to charge the kind of prices they like. And do we really need another fund?", he asked.

Industry critics – and two commissioners – question need for new $60 million local news fund

News | 11/03/2008 8:29 pm EST

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