CRTC sides with creative sector in broadcasters’ CanCon relief proposal

The CRTC has denied a request made by the Canadian Association of Broadcasters (CAB) to waive conditions of licence and regulations relating to broadcasters’ expenditures for the 2020 broadcast year, opting instead for an extended payment approach to benefit the entirety of the broadcasting industry. In a Thursday release, the regulator sided with the creative sector and public interest and research groups, noting that the production sector would be “unreasonably affected” by CAB’s proposal “because it was greatly affected by the adverse consequences of the pandemic.” In July 2020, CAB, which represents private Canadian TV and radio programming services, filed an application with the CRTC requesting “regulatory relief relating to expenditure and exhibition requirements” due to the COVID-19 pandemic. CAB originally proposed that the CRTC treat all broadcasting licensees as if they had met requirements, for the 2019-2020 fiscal year, relating to Canadian programming expenditures (CPE), programs of national interest (PNI), and Canadian content development (CCD) contributions, regardless of their actual levels -- meaning the commission would not order broadcasters to make up their 2019-2020 shortfalls in subsequent years -- and that radio’s CCD payments, made for events that had been cancelled and rescheduled, be carried over to the 2020-2021 broadcast year. According to Statistics Canada data, the gross domestic product (GDP) in the arts, entertainment and recreation industries declined by 63 per cent from February to May 2020. For comparison, the average decline for all industries across Canada was 14 per cent. Had the commission approved CAB’s proposal, broadcasters would have avoided paying up to $138 million in CPE, $13 million in PNI expenditures, and $13 million in CCD contributions, to the creative sector, according to its analysis. As a result, the CRTC ruled that, in regard to the required CPE, it will allow licensees of the large ownership groups in the television sector to pay incurred shortfalls as of Aug. 31, 2020, by no later than Aug. 31, 2023. Licensees of independent services have one extra year to pay their shortfalls. In its analysis, the commission noted that the broadcast industry was already experiencing “gradual declines” in revenue during the four fiscal years prior to the pandemic. It also pointed to an April 2020 study by Nordicity, filed by the Canadian Media Producers Association, which projected that from mid-March to June 2020 more than $2.5 billion would be lost in production volume, impacting 172,000 workers. “The creative community working in the television and radio sectors emphasized the importance of expenditure requirements as a central pillar of regulatory support for Canadian programming. It noted that in the past, the commission has stated that shortfalls are amounts that are owed to the broadcasting system,” the CRTC wrote in its decision. Television broadcasters argued to the commission that the COVID-19 relief funds from the government plus payment from the 2019-2020 shortfalls would mean the creative sector would be compensated twice. According to the commission, various levels of government spent more than $286 million in COVID-19 relief for broadcasters and “various players” in the arts and culture sector, which includes $68 million from the full waiving of Part I licence fees and the partial waiving of Part II licence fees. However, the regulator sided with the Writers Guild of Canada (WGC) by determining that the emergency funds and CPE and PNI expenditures are two different revenue streams. WGC argued that the former is intended for individuals and companies out of work whereas the CPE and PNI “generate work and, therefore, revenues for the production sector as a whole.” “Beginning in the 2020-2021 broadcast year, licensees can avail themselves of 10 per cent flexibility in regard to CPE and PNI (programs of national interest) under-expenditures until the end of their respective extended payment period, with the exception of the last year,” the commission wrote. “The flexibility relating to under-expenditures on locally reflective news is maintained at 5 per cent.” In regard to CCD contributions, the CRTC is requiring that any licensees in the radio sector pay 50 per cent of their shortfall by no later than Aug. 31, 2022, and the remaining half by Aug. 2023. “In regard to the radio sector, the commission has generally maintained contribution requirements, but has granted extensions for the payment of the amounts owed.,” it wrote in its decision. “Investment in Canadian programming is essential to help the broadcasting system achieve the policy objectives relating to the creation of Canadian content.” The CRTC also requires contributions to FACTOR and Musicaction to be paid by the end of Aug. 2021. Thursday’s decision “does not apply to expenditures and contributions that were required in order to make up previous shortfalls or to remedy harm previously caused to the broadcasting system” nor “absolve licensees of their regulatory obligations for the 2019-2020 broadcast year,” the commission noted. The commission also refused CAB’s proposal because its review process would create a significant administrative burden as it would be too difficult to determine which broadcasters were acting in bad faith. As for programming requirements, CAB asked that they be judged as “expectations” on a “should resources permit” basis, which the CRTC denied for the same reasons. “The subjective analysis would require complex investigations by the commission into broadcasters’ decision-making processes and motivations, something that is also not generally part of the commission’s review process,” the CRTC wrote. -- Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Hannah Daley at hdaley@thewirereport.ca

CRTC sides with creative sector in broadcasters’ CanCon relief proposal

News | 08/12/2021 5:23 pm EDT

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