Broadcasters urge CRTC to maintain 1.5% local programming contribution until economy improves

Canada’s major television networks say the CRTC should not consider any reduction in the 1.5% mandatory contribution BDUs now pay to support local programming until the economy picks up. CTVglobemedia Inc. doesn’t want any change for three years. Meanwhile, BDUs warn the new fee will result in higher bills for subscribers. The CBC/Radio-Canada tells the CRTC it’s “too early” to determine how quickly the economy will take to recover and urges the CRTC to maintain the current 1.5% stipulation until the middle of 2010. “There has been very little transparency or predictability with respect to the current economic crisis. A year ago, the Federal Government maintained that Canada would not be seriously impacted by the financial problems sweeping the rest of the world. Several months later this prediction was shown to be dramatically wrong,” writes the CBC/Radio-Canada in comments to the proposed group-based licence hearings set for November. The public broadcaster also recommends that the 1.5% stipulation be maintained for the 2011 broadcast year. Early this month, the Local Programming Improvement Fund (LPIF) came into force and compels cable, satellite and other broadcast distributors to contribute 1.5% of their gross revenues to local programming. The move opens the path for private and public over-the-air broadcasters in small markets to benefit from the $100 million subsidy, especially in the area of news. But when the LPIF came into force on Sept. 1, the CRTC said it intends to review whether the 1.5% contribution is appropriate in the long term or whether the commission should settle for a 1% contribution as originally proposed in the fund’s framework. The CRTC has sought opinion from stakeholders on the issue in the upcoming group-based licence hearings in November to which the CBC, CTVglobemedia and Canwest Television Ltd. responded. CTVglobemedia, however, has taken a different tact, urging the CRTC to maintain the LPIF contribution in its current form for another three years. It ties the success of the LPIF to fair negotiations on fee-for-carriage, but warns that even if talks on the contentious issue are successful the outcome is not a “substitute” for LPIF. “They are wholly different mechanisms, with very different objectives,” writes CTVglobemedia, which shares common ownership with satellite television company Bell TV. “More ever, given recent actions by BDUs, it is clear that they will take whatever steps necessary to delay the implementation of negotiated fee for value (NFV).” Echoing its competitors, Canwest agrees it is “too early” to revise current contribution requirements. “The Commission’s decisions regarding LPIF contribution levels, allocation formula, and eligibility criteria were released only two months ago,” Canwest notes. “There has been no time to assess the effectiveness of the fund against stated objectives. Parties will have a better understanding of the economic and broadcasting environments in the months ahead.” Canwest and the CBC have also warned the CRTC against imposing incremental expenditures in the future. Canwest argues that the move will discourage local stations from exploring avenues for efficiency. As expected, cable giant Rogers Communications Inc. isn’t happy with the LPIF, arguing there is “no logical” reason for the CRTC to allow OTA stations to receive money from the fund while also accessing money that might accrue from fee-for-carriage, if proposed negotiations on the matter are successful. Likewise Cogeco Cable Inc. is also opposed to the LPIF, saying there is no reliable evidence necessitating the 1.5% contribution and that the move will result in cable bill hikes for its subscribers.

Broadcasters urge CRTC to maintain 1.5% local programming contribution until economy improves

Broadcast | September 17, 2009

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