CBC defends LPIF funding, says ad revenues still returning

GATINEAU—CBC/Radio-Canada spent $15 million of local programming funding last year on news shows that resulted in $1.1 million in additional advertising revenues for local stations during the supper hours, officials from the public broadcaster said at a CRTC hearing Tuesday. That $15 million, spent directly on increasing and improving local programming on eight CBC stations across the country, was a portion of the $40 million the Crown corporation received through the CRTC's $106-million Local Programming Improvement Fund (LPIF) last year. Christine Wilson, executive director of content planning at the CBC, said the broadcaster used the $15 million to increase supper-hour local news programming from 60 to 90 minutes at seven of the eight stations. She said the investment resulted in a two-thirds increase in audience levels and a 45 per cent rise in audience reach for the stations. The resulting advertising dollars did not recoup the $15 million. “Advertising dollars do follow, and in fact our ad revenues have increased for those supper hour shows by $1.1 million,” Wilson said. “We’re very happy and thankful for that, but we spent $15 million to get there ... It’s fabulous but it’s not a recipe to get rich,” she said. CBC executives appeared before the commission on the second day of a weeklong hearing to review the future of the LPIF, created by the CRTC during the 2008 global financial crisis to help support local stations amid declining advertising revenues. Without the fund, the executives said, CBC would have to trim $40 million from the local programming budgets of its small market stations. “If you take the LPIF, you will take $40 million out of our regional expenditures, and we don’t have $40 million to replace it,” Steven Guiton, a vice president and chief regulatory officer at CBC, said. Guiton said CBC as a whole saw television advertising revenues drop in 2008 and that those revenues are only now returning to pre-recession levels. He said ad revenues for the broadcaster's French and English-language conventional TV stations were $296 million in 2009, $338 million in 2010, and $370 million in 2011. Tom Pentefountas, the CRTC's vice-chair of broadcasting, and other commissioners, questioned Guiton and other CBC executives for more than two hours Tuesday morning, asking why the commission should continue to allow the public broadcaster to draw from the LPIF, which takes 1.5 per cent of the revenues from TV distributors and allocates those funds to local TV stations. Commissioners suggested that parliamentarians view CBC as having a mandate to use its parliamentary appropriations to serve local audiences. They also asked why CBC would not shift funds away from other areas to compensate for support for local programming if the LPIF was scrapped or if CBC was denied access to the fund. Major distributors Shaw Communications Inc. and Quebecor Media Inc. have said the commission should revoke LPIF funding from CBC stations because it is publicly funded. CBC also collects from the fund without paying into it because it is not a TV distributor. “If you have money for American game shows, why do you need another handout to do news coverage of flooding in Manitoba?” CRTC commissioner Marc Patrone said Tuesday. Guiton pointed to data released by the commission last week that said the CBC spent $760 million on programming last year and that 95 per cent of that money was spent on Canadian programming. “That amount of Canadian programming ... is $200 million more than the entire private conventional industry spends on Canadian programming,” Guiton said. “We think we’ve got our priorities right.” Wilson said CBC’s contract to broadcast two high-profile American game shows, Jeopardy and Wheel of Fortune, were signed when the public broadcaster was preparing to roll out a slate of new prime time programs. She said the popular American shows were intended to draw viewers to the network in the hours before new Canadian shows aired to help build awareness and a following for the programs. Kirstine Stewart, the CBC’s executive vice-president of English services, said Jeopardy and Wheel of Fortune will not be renewed when their rights expire next year. “Our licence ends with those particular game shows next year, and they’re not being replaced by foreign programming,” she told commissioners. Stewart told The Wire Report that the CBC has not yet considered how it would cope without the $40 million it receives through the LPIF if the commission decides to scrap the program. She said such considerations would mimic the Crown corporation’s preparations for cuts to its annual parliamentary appropriations, as announced in the Conservative government's federal budget last month. “That was a long process, and we had to look at our priorities and had a criteria to work out what choices we would make,” she said in an interview. “We’d have to do the same with this.” Stewart said CBC’s local CBET station in Windsor, Ont., was “destined to be closed” before the LPIF was created in 2008, but she could not confirm whether the Windsor station or any others would be shuttered if LPIF funding is withdrawn. “At this point, we could not tell ... but the fact is, we had a station at risk and the LPIF saved it,” she said. Some distributors, such as Shaw, have asked the commission to scrap the fund as quickly as reasonably possible, while independent broadcasters and producers argue to maintain the program for at least another three years. On Tuesday, representatives from Newfoundland Broadcasting Company Ltd. called on the commission to make the LPIF a permanent source of funding for independent broadcasters. “This fund is a kind of lifeline. It’s a kind of bridging that at least pays for local content to be produced. That’s why we feel it should be made permanent,” Scott Stirling, president of Newfoundland Broadcasting, said in an interview. The hearing continues Wednesday with appearances by Telus Communications Co., MTS Allstream, and advocacy group Canadian Association of Community Television Users and Stations (CACTUS), among others. nkyonka@thewirereport.ca

CBC defends LPIF funding, says ad revenues still returning

Broadcast | April 17, 2012

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