New local programming fund could trigger stricter reporting rules for CBC

A stipulation allowing the CBC access to money from the proposed Local Programming Improvement Fund (LPIF) is likely to force the public broadcaster to report expenditures incurred by its stations and affiliates in smaller markets to the CRTC -- something the public broadcaster has resisted doing for years.The CBC’s reluctance to divulge its expenditures to the CRTC was sharply criticized by Commissioner Michel Morin, in a dissenting opinion to last month’s landmark decision on the regulatory framework for BDUs and discretionary services (PN 2008-100). “Unlike its counterparts in the private sector, the public broadcaster has never seen it fit to provide the CRTC with relevant information on each of its stations across the country,” writes Morin, who criticizes the LPIF as a subsidy for a public broadcaster that is already receiving $1.5 billion in taxpayers’ money.Each year, private broadcasters provide the CRTC with a long list of information, including details on wages, programming costs, operating revenues, profit before interest and taxes, advertising revenues, sales, staff numbers, and administrative costs. The CBC’s reluctance to divulge this information poses future difficulties for administering the LPIF and the public broadcaster should have been excluded from the fund if the CRTC wanted to maximize benefits for private broadcasters, Morin says.“Where are the Crown Corporation’s audited numbers for recent years that the Canadian Association of Broadcasters (CAB) may need to allocate the Fund’s resources,” asks Morin.However, the decision on discretionary services stipulates that CBC-owned and operated stations that receive LPIF funds will file expenditures annually to the CRTC and offer detailed information on how the incremental funds were spent. In order for the commission to calculate each station’s current base level of programming expenditures, they must provide backdated information for broadcast years 2005-06, 2006-07, 2007-08.The LPIF was created to boost local programming, particularly news, in smaller markets with populations of less than one million people. Cash for the fund will be generated through contributions from BDUs, which will be charged 50 cents per month for each subscriber. The CRTC hopes $60 million will be generated in the first year of the LPIF, which is expected to be administered by the CAB.Industry stakeholders have criticized the fund saying it wasn’t well thought out and that there was little consultation before it was made public, in addition to some calling it an undeserved subsidy for the CBC. Furthermore, Morin says private broadcasters face financial difficulties which the CBC is shielded from through annual parliamentary appropriations.“There is no doubt in my mind that the CRTC is circumventing Parliament by creating a new source of funding for the public service ...,” writes Morin.Morin’s view is echoed by Rob Malcolmson, partner and head of communications at the Toronto-based law firm Goodmans. Malcolmson, who represented CTV at the hearings, says its “odd” that the CRTC allowed the CBC access to the fund.“It’s an additional form of subsidy when CBC is being fully subsidized by the government”, says Malcolmson, adding that it’s unfair in light of the financial difficulties private broadcasters are facing.But Lise Lareau, president of the Canadian Media Guild, says the LPIF is a good idea in light of the funding shortfalls that private broadcasters experience in producing local content in smaller markets since the advent of consolidation in the last decade.“I would say it’s an equal opportunity fund for anybody who wants to do local news and we know it’s desperately needed,” she says.Morin also writes that he foresees problems with the administration of the fund by the CAB when it will be allocating contributions from BDUs to the CBC—which is not a member of the CAB—rather than its own members.Private broadcasters, especially the big networks, have not responded to the decision to allow the CBC access to LPIF funds but John Douglas, VP, public affairs CanWest Global Communications, says his company may comment on it in the future.“We are in the midst of determining our position on the fund,” he says.The CRTC has asked the CAB to establish a framework for the LPIF by Jan. 19. If the association fails to beat the deadline, the CRTC will open bidding for tenders from other parties.

New local programming fund could trigger stricter reporting rules for CBC

Broadcast | November 13, 2008

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