GATINEAU – Rogers Media’s proposed Canadian program expenditures and programs of national interest spending drew the ire of the CRTC during the second day of hearings into the group-based licence renewals.
“When I listened to what you both said on CPE and PNI, you are really asking for a policy change. That’s as simple as that. It’s like a review and vary application, saying we like what you did but we want you to change it so it fits better to [Citytv],” said CRTC chair Konrad von Finckenstein. “I don’t understand why you feel we should change the basic policy we enunciated both in terms of CPE and PNI just because city is not healthy.”
Keith Pelley, president of Rogers Media, said the company doesn’t believe it’s fair to base its future CPE and PNI obligations for a company that has lost $100 million over the past three years.
“We inherited a group of stations that were failing, failing miserably. Costs were high, revenues were low and we had to change things,” he said. “We just do not believe this is an appropriate basis on which to assess historical expenditures. So we took a completely different approach when looking at the CPE and PNI that made the most sense for financial viability for our business.”
Rogers insists that Canadian content spending requirements must reflect the unique circumstances of each broadcast group and that a one-size fits all approach won’t work. The company has proposed CPE of 25% rather than 30% and a PNI of 2.5% rather than 5%. commitments for CPE and PNI than the levels the Commission established in the group licensing policy framework last year. Rather than meet at a minimum 30% CPE and 5% PNI, the company has proposed 25% and 3% spending.
Shannon Valliant, VP of finance, operations and strategic development, acknowledged that in the past Rogers’ broadcast assets have achieved the 30% CPE level, but noted that CPE was inflated because of low revenues.
“If you look at this broadcast year when we’re starting to bring revenues back our CPE as a group is about 26% and for City is about 23%,” she added. “So we don’t feel a CPE of 30% historically will allow Citytv to be a financially viable stable business to continue to contribute to the broadcasting system.”
During its opening remarks, the company outlined a variety of scenarios.
It argued during its opening remarks that its CPE and PNI obligations must take into account its mix of assets. With a large portion dedicated to local services and few specialty channels, the company will be hard pressed to meet the Canadian spending requirements.
“The most glaring gap in the Rogers broadcast portfolio is our lack of specialty services,” said Pelley. “Bell, Shaw and Corus all own a number of strong specialty services which allows them to amortize programming costs way more effectively than a group of our size. They are also able to buy programming more effectively since they can use their economies of scale as leverage in acquiring programs.”
Rogers requests for special treatment under the group licensing policy didn’t find favour with new vice-chair of broadcasting Tom Pentefountas. Showing he hasn’t lost any of his courtroom skills, the former lawyer pressed Rogers hard on why it should be given a break on the rules.
“You’re asking us to give you a break over the next five years and then at that point you will become good corporate citizens and contribute proper amounts to Canadian content?” he asked.
Pelley responded that it’s important not to lose sight of the financial difficulty the Citytv stations were in. “The other argument is that we just want to be treated fairly based on the fact that our mix is not the same as our competitors,” he added.
“You’re asking us to allow you to become profitable on the backs of Canadian programming and five years down the road we’ll re-examine the whole issue?” Pentefountas shot back, unsatisfied.
We’re not asking for a break, we’re just asking the Commission to recognize we have less specialty services which brings up your combined CPE,” said Susan Wheeler, VP of regulatory affairs for Rogers Media. “If we had more, we’d be easily able to get there, but because we only primarily have a conventional services business, we’re much lower than the 30% target. So we’re not asking for a relative break, we want the Commission to consider our mix of services in establishing a percentage that is equitable with our competitors.”
More to come as Corus is up next today (April 5).
