Canwest and CBC at odds over who and what should be eligible for local news subsidies

Canwest Television Ltd. wants the CRTC to make it easier for broadcasters to access a new $60-million local programming fund by eliminating complicated allocation formulas, and allowing funding to go to expenses other than strictly local news. The CBC disagrees, saying new money should only reward broadcasters who spend the most on local programming. For the CRTC, it appears that announcing the Local Improvement Programming Fund has been the easy part. The more difficult challenge will be determining who is eligible, how awards should be calculated, which expenses should be eligible and how the new fund should be administered. There are no shortage of ideas from industry players who filed their views as part of the CRTC’s upcoming licence renewal hearing for conventional broadcasters. Canwest and CBC, for example, do not see eye-to-eye on how the monies should be allocated. CBC supports the regulator’s suggestion that broadcasters in small markets who have spent the most on local programming over the past three years be eligible to receive the biggest subsidies. The CRTC would soften this requirement during the current economic crisis to allow funding on the basis of a “floating average” of local programming expenditures – a position the CBC also supports, at least on a short-term basis. “In the current economic environment it is unlikely that conventional broadcasters will be in a position to sustain current levels of spending on local station production. If that is the case, then the LPIF will not achieve the objectives set out for it by the Commission because many eligible stations will not be able to use it,” writes Bev Kirshenblatt, CBC senior director, regulatory affairs, in a March 30 brief to the CRTC. The CBC adds that the LPIF should only be used for broadcasters serving markets with less than one million people. “If the LIPF at its current level is going to make a difference, then it needs to be applied on a limited market basis… This will focus LPIF resources on those markets where they are most needed in the system.” Canwest says the proposed LPIF rules are still so vague that it’s not clear who will be eligible. In CBC’s case, for example, Canwest wonders how the public broadcaster’s stations in markets with less than one million will receive the funds. The CBC, unlike its private broadcast competitors, files its financial information in confidence with the CRTC, making it difficult to determine how much of the pot it would be eligible to receive. Canwest says it’s also unclear what constitutes local programming. It asks whether stations that broadcast religious, ethnic, provincial educational programs, and those that broadcast very low local programming requirements would qualify. As well, Canwest takes aim at an allocation formula it contends could penalize broadcasters who have tried to increase efficiencies and reduce costs at the local station level, and rewards those with “inefficient and potentially wasteful spending.” “If the objective of the LPIF is to maintain or improve local programming, it should not selectively favour certain broadcasters over others. That would actually create disincentives for stations currently spending less on local programming in a given market to maintain or improve their local programming since they will inevitably fall further and further behind the market leader,” writes Charlotte Bell, senior VP, regulator affairs at Canwest. Rather, Canwest recommends a more simplified approach for the LPIF: Divide the LPIF into English- and French-language envelopes; Determine on an annual basis, the relative amounts within each envelope that will be assigned to individual markets; and Within each market, distribute the LPIF funds on an equal basis to all eligible broadcasters. Canwest recommends that other expenses – beyond the creation of local programming – be eligible for LPIF support. It points to its Digital New Project as an example of an initiative that has lowered Canwest’s operating costs for local programming, by reducing technical costs. For its part, CBC recommends more narrow eligibility criteria. For example, it dismisses the Canadian Association of Broadcasters’ (CAB) proposal that local program funding be used for promotional and marketing expenses. “It is difficult to justify why LPIF funding should be used to fund “advertising and the creation of promotion campaigns to advertisers” as proposed by the CAB,” the CBC states. In terms of governance, the CAB has proposed that the LPIF board should have three representatives; one from CAB; one each from the CBC/Radio Canada and BDUs. However, the CBC argues there is no need for a large board, saying three members—each representing CAB, CBC/Radio Canada, and the BDUs, are enough. This is far from the last word on the make-up of the LPIF. Broadcasters and other groups have until April 23 to file additional comments on the administration and delivery of the fund as part of a separate proceeding that is also considering moving up the date for introducing a new distant signal regime.

Canwest and CBC at odds over who and what should be eligible for local news subsidies

Broadcast | April 13, 2009

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