Expenditure requirements to be key issue at ‘huge’ group licence renewal hearing

Industry insiders expect Canadian content expenditure requirements to be one of the top issues at the CRTC’s upcoming group-licence renewal hearing. “The entire conversation is about how much broadcasters will be spending on overall Canadian content as a group licence condition,” Maureen Parker, executive director of the Writers Guild of Canada (WGC), said in an interview. In March, the CRTC announced a new regulatory policy for a group-based approach to the licensing of large English-language, private television groups. The commission now regulates programming services in large broadcasting groups individually, but the group-based approach will allow Rogers Communications Inc., Shaw Communications Inc. and CTVglobemedia Inc. to review their Cancon expenditure requirements and renew their licences on a company-wide basis. In its 1999 television policy, the commission said private, over-the-air broadcasters could apply to remove Cancon expenditures as a condition of licence. But this led to an uneven distribution of expenditure requirements across the industry. “What we’re looking at now are the specifics. We have a target of five per cent for drama and a 30 per cent corporate spend. We expect the broadcasters will try to lessen those amounts, and we want to hold the broadcasters to those sorts of expenditure requirements,” Parker said. Under the new model, large broadcasters will be given increased flexibility to aggregate their Cancon spending, which will be calculated as a percentage of the previous year’s revenues. They can also move around their required Cancon spending between services. “In order to permit the groups to adapt quickly to changing circumstances, qualifying specialty licensees within a designated group will have the flexibility to attribute 100% of their required CPE to any other qualifying specialty service, or to conventional television services, within the same designated group,” the commission said in its new policy, released last spring. “Designated groups will also have flexibility to attribute a portion of the required CPE for the conventional television services controlled by that group.” The broadcasters’ flexibility will be limited. Expenditures for a conventional television service can be attributed to another specialty service, but only up to a maximum of 25 per cent. The CMPA said by email that the hearings will be an opportunity for the CRTC to re-establish the expenditure requirement regime. In 2009, private conventional television broadcasters spent $77,372 on Canadian drama and comedy, down 11 per cent from 2005 levels, according to the CRTC’s 2010 industry statistical report. “Independent producers have been waiting for more than a decade to correct the unintended consequences that resulted from the CRTC’s decision in 1999 to eliminate expenditure requirements for private over-the-air television broadcasters,” Anne Trueman, director of communications and media at the Canadian Media Production Association (CMPA), wrote. “If done right, that will be good for independent producers, the creative community, and the Canadian broadcasting system as a whole.” Ken Stein, Shaw’s senior vice-president of corporate and regulatory affairs, said in an interview the flexibility that the new policy affords broadcasters will ultimately translate into better quality Canadian content. “I think the key thing is we do get that kind of flexibility. We’ve argued that one of the reasons we don’t have strong Canadian content is because it’s been inflexible,” he said. “From Shaw’s point of view, we’ve all felt that Canadian programming can be better than it is ... I think you make it better by letting people have their own freedom to do what they want to do, that you allow them to go into niche markets.” Private broadcasters have submitted applications to renew their licences for the proceeding. The CRTC plans to announce the group licensing hearings and publish the applications for comment in December. Industry sources told The Wire Report that they expect the proceeding to be announced by the third week of December and the call for comments to close by the end of January. Parker said the public hearings may begin in April, lasting three weeks. The hearings will touch on the following areas: Canadian programming expenditures, content requirements, programs of national interest, local programming, non-Canadian programming expenditures, independent production, regional production, application of social policies, ownership issues, administrative renewals, and licence-term length. It will also review the Local Programming Improvement Fund (LPIF), a television broadcasting support fund created by the CRTC, and the commission’s proposed value-for-signal regime. By all accounts, the proceeding will be a large one, broad in scope. “The key thing in terms of the hearing, in light of the policy, is recognizing a couple of things: first, this is new stuff. Nobody has ever gone through a process like this. So it could get quite complicated,” Stein said. “It’s not just a financial thing, it’s also the kind of service they offer to consumers. So it’s a huge hearing … Decisions that are made are going to affect the next five to seven years.” The CMPA will also use the hearing as an opportunity to discuss terms of trade between producers and broadcasters. “The CRTC has clearly stated to the large broadcast groups that it expects them to negotiate a terms of trade agreement with independent producers by the time of the licence renewal proceeding,” Trueman said. “The CMPA has simplified its proposal to broadcasters and is motivated to get a deal done on behalf of all producers. Every day that goes by without an agreement hurts independent producers, so we’re looking forward to this process finally coming to an end for the mutual benefit of all parties.” The CMPA has previously argued producers should be compensated for digital rights. In October, the commission denied applications from CTV and Rogers for early regulatory relief from the Canadian content requirements. The companies had asked the CRTC to drop their overall minimum level of programming from 60 to 55 per cent, in line with the new policy, but the commission said it would not apply it on a piecemeal basis. Rogers was not available for comment Monday, and CTV declined to comment. The CRTC said in its 2009-2010 departmental performance report to Parliament that it also plans to hold licence renewal hearings for the CBC in fall 2011. kfournier@thewirereport.ca

Expenditure requirements to be key issue at ‘huge’ group licence renewal hearing

Broadcast | November 15, 2010

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Expenditure requirements to be key issue at ‘huge’ group licence renewal hearing

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