Broadcast industry warns LPIF in current form could trigger cut in program spending

Private broadcasters are hinting the CRTC may have to lower its expectations for local programming in light of the global economic meltdown. Responding to the commission’s request for a framework for the proposed Local Programming Improvement Fund, the Canadian Association of Broadcasters says the CRTC’s “unrealistic” expectations could result in broadcasters cutting spending in all programming categories. Born out of the BDU framework decision released last October, the LPIF garnered criticism and praise. Proponents hailed it as a lifeline for local programming in areas with small populations. Critics slammed it as an unnecessary demand on BDU subscribers, who will likely see an increase in their bills because of a stipulation that requires BDUs to up their Cancon contributions from 5% to 6%. The framework, released by the Canadian Association of Broadcasters (CAB) on Feb. 23, captures the reservations of the critics, especially private broadcasters which aren’t keen on the $60-million fund. For many, the LPIF came as a complete surprise, particularly since there had been no consultation first with industry stakeholders. There’s also a feeling that the CRTC was blind to the “unique” challenges facing over-the-air broadcasters—whose profit margins have been on the decline since 2004. The CRTC conceived the idea for the fund before economic fortunes spiralled into a freefall. As a result, the CAB argues that “any expectations of future programming expenditures, based on the circumstances that prevailed six to twelve months ago, must be recalibrated in light of more recent developments. “ It’s no surprise then that the fanfare and publicity that usually greets such documents was replaced with what amounted to a low-key and muted announcement—buried in the hubris of the colossal new media hearing and stifled by major job cuts at CAB, not to mention a heavy workload for the association as a result of the several media hearings its members were preparing for early this year. Although the CAB was tasked with drafting the framework, it leaves no doubt where the idea originated, saying the LPIF “represents the Commission’s unique response to the challenges facing smaller television markets with regard to local programming.” The CAB also notes that the first opportunity the industry had to comment on the delivery and administration of the LPIF framework was on Feb. 13, after the CRTC invited the industry to offer its views. CAB also reiterates that there may be other ways of improving local programming. “Licensees may observe that the LPIF is but one way of achieving the Commission’s objectives for local programming; however, to be effective, the design of the LPIF must take into account the critical economic realities facing the over-the-air (OTA) television.” In somewhat muted language, the CAB also suggests the CRTC is blind to the realities facing the industry. As a result, the association rejects most of the LPIF recommendations. For example, the CRTC had stated that LPIF funds should be incremental to each station’s current expenditures. CAB says incremental spending is “unrealistic” in the face of the current economic downturn, and could result in OTA broadcasters cutting spending in all categories, including local programming. It adds: “It is unlikely that these broadcasters will match or exceed their historic local programming expenditures.” In terms of specifics, the CAB has no shortage of suggestions for how the new funding can be used: e.g. to cover expenses associated with operating overheads like leasing of equipment and facilities, paying for advertisements on multi-platforms, funding digital and or HD cameras and studios, fibre links and trucks for live broadcasts. Regarding an allocation formula for the fund, CAB suggests that the modality used for the Small Market Local Programming Fund (SMLPF), works just fine and should be adopted for the LPIF for “simplicity and “objectivity.” The CRTC had recommended that the LPIF be administered by the CAB, but the association wants the fund overseen by a new not-for-profit corporation governed by a board of directors composed of five representatives from the industry, two to be nominated by CAB and three from companies with broadcast activities in small market areas.

Broadcast industry warns LPIF in current form could trigger cut in program spending

Broadcast | March 17, 2009

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