GATINEAU – As Cartt.ca reported last week, the CRTC has a big day coming up on Monday. Not only is the network management hearing beginning that day, the Regulator is also launching a new proceeding seeking structural reform of the TV sector while releasing new rules (and potentially a new amount) for its yet-to-be-launched Local Programming Improvement Fund.
The CRTC’s Ontario commissioner Rita Cugini addressed the two broadcasting items in a speech to the Radio Television News Directors Association on Saturday, noting that structural reform for the TV biz seems to be a necessity.
“The Broadcasting Act specifies that local programming is an important element of the Canadian broadcasting system,” she said. “The Commission believes that it is in the public interest that the system includes healthy local stations that will enrich the diversity of information and editorial points of view. And Canadians have told us that they want their local programming, especially the news.
“Unfortunately, it seems that this kind of programming simply will not pay for itself today. Smaller-market stations are, on the average, not profitable. In fact, broadcasters have warned that they may have to shut down some of those stations. (see Canwest, E! and CTV, A)”
In the 2008 Broadcast Distribution Undertaking regulations, the CRTC established the LPIF, saying: it would cost BDUs another percentage point on top of the 5% they already pay to have Cancon made; that they can’t increase subscriber bills because of it; it would be for stations serving markets under a million people; that to take advantage of the new money it had to be for new content, and; that it was to launch September 1, 2009.
At 1% of BDU revenues the LPIF would be a $68 million fund. If it were to go as high as 2.5%, as recommended by the Standing Committee on Canadian Heritage, it would be a $170 million boost to local, small market, TV.
The only thing that looks to remain the same is the start date and perhaps the size of markets eligible. Most are now assuming it will be increased and that gaining access won’t be based on incrementally new programming, year-over-year, but instead on the average amount of local content a station has produced over the three years prior.
As for the PN, the Commission is examining everything. Said commissioner Cugini, echoing what CRTC chairman Konrad von Finckenstein said about 10 days ago:
“In those hearings, we will be developing a new model to replace the one that has served us well since Canadian television began in 1952 – a model that was based on conventional over-the-air television. Conventional TV drew large audiences across the country. Through the public and private networks, it has helped to define a Canadian identity. It put us all into a front-row seat at great national events. And it has helped us participate in the life of our local communities.
“In recognition of these fundamental contributions, conventional broadcasters have enjoyed regulatory support through such privileges as mandatory carriage and simultaneous substitution. This helped them earn the advertising revenues that supported Canadian content – including culturally significant programming like drama and documentaries.
“But with the arrival of pay and specialty, cable, satellite and new media, what is going to become of conventional broadcasting?” she asked. “We cannot simply allow it to wither away, because there is no ready replacement for the core services that it provides: local programming, local news and programs of national interest.”
Before facing some very tough questioning from the reporters in the room at the RTNDA ProDev Seminar day, Cugini outlined what the Commission will be asking about – and for:
• A focused and systematic approach to community involvement and reflection by TV broadcasters, emulating the approach of local radio.
• Concrete and measurable commitments by broadcasters to the production, programming and airing of local content.
• And the harmonization of local content requirements based on market size.
• The negotiation of fair market value compensation for distribution by the BDUs of distant signals and conventional local signals. If necessary, these negotiations could be backed up by CRTC arbitration.
• Ensuring the integrity of Canadian broadcaster signals: We are considering whether BDUs should be allowed to distribute U.S. networks if they have not negotiated a deal with the Canadian conventional broadcasters who hold the rights to the programs broadcast by those U.S. networks.
• Establishing consensus on a hybrid solution to digital migration, with or without government support.
• Defining and spelling out the role of public broadcasters in a restructured conventional TV universe.
• Developing appropriate measures to keep spending on foreign programming within acceptable limits.
• Ensuring the place of Canadian creative talent and production in the broadcasting system.
• And granting and renewing licences on the basis of ownership groups instead of categories of service.
So, thanks to this advance notice of what’s supposed to be coming on Monday, yesterday afternoon the CBC’s senior director of regulatory affairs sent around a proposed distribution order for BDU compensation in support of local TV.
“CBC/Radio-Canada is aware that the Commission intends to release a Broadcasting Notice of Consultation in early July regarding a number of broadcasting issues, including a method to ensure that broadcasting distribution undertakings (BDUs) provide local television stations which they distribute with compensation in recognition of the value of and the contribution made by their services to the Canadian broadcasting system,” reads the letter from Bev Kirshenblatt.
“CBC/Radio-Canada recognizes that there are a number of mechanisms which might be used by the Commission to achieve this goal. It is the Corporation’s view, however, that the simplest and most efficient approach would be to issue an order pursuant to section 9(1)(h) of the Broadcasting Act that would establish the requirement for all BDUs to conclude an agreement with the relevant local television stations regarding such compensation.”
The CBC’s submission, copied below, doesn’t contemplate forcing cable and satellite companies to pull their American 4+1s in a dispute (well, CBC doesn’t simsub, does it?), as von Finckenstein said the Commission was contemplating.
Distribution Order 2009-XX
Distribution of the programming services of local and regional television stations by persons licensed or otherwise authorized to carry on broadcasting distribution undertakings under the Broadcasting Act.
Section I
The Commission hereby orders, pursuant to section 9(1)(h) of the Broadcasting Act, persons licensed or otherwise authorized under the Broadcasting Act to carry on broadcasting distribution undertakings to distribute as part of the basic service the programming services of local and regional television stations in accordance with:
i) section 17 or 32 or 37 of the Broadcasting Distribution Regulations;
ii) the broadcast distribution undertaking’s conditions of licence;
iii) Exemption Order for Small Cable Undertakings; and
iv) Exemption Order respecting cable broadcasting distribution undertakings that serve between 2,000 and 6,000 subscribers;
as may be applicable, on the following terms and conditions:
a) the broadcasting distribution undertaking and each local or regional television station distributed by the broadcasting distribution undertaking shall conclude a legally binding written agreement setting out the monthly compensation payable by the broadcasting distribution undertaking to the local or regional television station in recognition of the value of and in support of the contribution made by the programming service of the local or regional television station to the Canadian Broadcasting System;
b) the broadcasting distribution undertaking shall file the written agreement identified in paragraph a) with the Commission within 30 days of the date of the agreement;
c) if the broadcasting distribution undertaking and the local or regional television station have not concluded the agreement required under paragraph a) within 90 days of the date of this Order, either the broadcasting distribution undertaking or the local or regional television station may submit a request to the Commission for arbitration of the matter by the Commission;
d) any arbitration conducted by the Commission at the request of the broadcasting distribution undertaking or the local or regional television station pursuant to paragraph c) shall be conducted in accordance with the procedures established by the Commission and any determinations made by the Commission shall be final and binding on the parties.
Section II
When determining the compensation payable to a local or regional television station in respect of a programming service distributed by a broadcasting distribution undertaking, the parties shall take into account, in addition to any other relevant considerations, the following factors:
1) the amount of local news, local programming and programs of national interest broadcast by the programming service;
2) the number of subscribers of the broadcasting distribution undertaking who receive the programming service of the local or regional television station, as well as the projected growth in the number of such subscribers;
3) the total population of the local market served by the broadcasting distribution undertaking, as well as the projected growth of this population;
4) the number of local and regional television stations serving the local market;
5) the viewing audience to the programming service of the local or regional television station in the local market; and
6) the compensation being paid by the broadcasting distribution undertaking to other programming services.
Section III
For the purposes of this order basic service, local television station, programming service, regional television station and subscriber carry the meanings as defined in the Broadcasting Distribution Regulations, as amended from time to time.
