Federal government forgives $450 million in broadcaster fees; asks CRTC to consider fee caps

Canada’s broadcasters and the federal government have inked a landmark deal that waives $450 million in Part II fees and opens the possibility of a new capped fee regime. The settlement, which comes a week before a Supreme Court hearing on Part II fees, forgives money owing for 2006, 2007, and 2008. The payments were stalled because of a legal challenge launched by the Canadian Association of Broadcasters (CAB). “The agreement represents a reasonable compromise for both sides,” said Charlotte Bell, chair of the CAB. Under the deal, the CRTC is required to start proceedings to consider a structure for a new capped regime. Heritage minister James Moore said the regime would be capped at $100 million per year, adding that it will spell predictability and stability for the industry. Long a demand of the CAB, which has argued for a fair and predictable regime since 2003, the agreement is a victory of sorts for broadcasters, says Carmi Levy, a technology analyst based in London, Ont. “What they wanted was predictability, they wanted accountability, and they wanted a clear and concrete return on that investment fee,” says Levy, adding that a capped Part II licence regime would spell fairness and allow broadcasters to project their budgets without worrying that the government would double their payments. “The broadcasters were never averse to paying. They were averse to paying as much as they were and not seeing any return from that investment.” Part II fees first came into force in 1997. Because they are charged in addition to licence fees, CAB has labeled them an “illegal” tax since 2001. Subsequently, the association launched several court challenges. Last April, the Federal Court of Appeal ruled that Part II fees were legal, which sparked a CAB appeal with the Supreme Court two months later. In December 2008, the Supreme Court agreed to hear the CAB’s concerns on October 19, 2009. In light of the government’s decision, the CAB has agreed to drop its appeal. That a settlement took so long to reach (CAB first launched a legal challenge in 2003), means the government needs to take a more proactive stance on contentious broadcast issues in the future, says Levy. The agreement also comes in the wake of intense lobbying by broadcasters. In June, Tech Media Reports obtained access to information records showing that a high powered CAB delegation lobbied Moore on the contentious fees. The CAB delegation pushed for a “negotiated” out of court settlement before the Supreme Court hearing and asked for “immediate” relief from Part II fees. Early this year, other parties also added their voices in pressuring the government to rethink its Part II regime. In March, CRTC chair Konrad von Finckenstein told the House of Commons standing committee on Canadian Heritage, that the elimination of Part II fees would add more cash to the broadcast industry than any regulatory concessions. In its June report on the financial difficulties facing the industry, the Heritage committee also recommended axing of Part II fees. However, as the CRTC explores a new Part II fees framework, the process is likely to take more than a year before a ruling, says Levy. “The wheels of government turn slowly and conservatively on such issues. I would say it will take upwards of 18 months from now.”

Federal government forgives $450 million in broadcaster fees; asks CRTC to consider fee caps

Broadcast | October 8, 2009

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