GATINEAU – Corus has recently filed an application to the CRTC to amend its conditions of licence to be allowed to delay spending on Canadian Programming Expenditures for 2020.
By condition of licence, Corus must devote 30% of the previous year’s gross revenues to the acquisition of or investment in Canadian programming. Also, by condition of licence, Corus can underspend any given year’s expectations by 5%, but that must be reinvested the following year.
Better than anticipated ad and subscription revenues, however, have left the company in a bit of a financial bind, it has told the CRTC.
A Corus spokesperson told Cartt.ca by email: “A higher than expected year-over-year revenue increase for Corus in fiscal year 2019 has created a dramatic spike in our CPE obligation for fiscal year 2020. The CPE increase is of such a magnitude that our current maximum CPE under-expenditure allowance (5%) would be insufficient to mitigate the negative impacts we anticipate.
“We are simply asking the CRTC for the flexibility to spread a larger share of our annual CPE obligation over the remaining years of our licence term. In other words, the application is fundamentally about timing flexibility. To be clear, if granted, our application would result in no net loss of investment in Canadian content.”
The tone of the application makes it clear Corus finds itself in a bit of a financial pickle because it needs to pay down debt and its Canadian content plans for the next year are already set. “Corus’ recent financial performance and current CPE rules will require it to dramatically increase its cash investment in Canadian programming in a very short time frame. That spike would: (a) require Corus to make sub-optimal programming investments; and, (b) impede progress on Corus’ debt repayment strategy. Both events would leave our company in a more vulnerable financial position in coming years,” the application reads.
“The roughly $23 million in incremental investment cannot simply be used to increase budgets for existing projects in the pipeline for the upcoming broadcasting year. For the upcoming broadcasting year, television schedules have already been set, series have already been ordered, casting and script decisions have been made. Production budgets have already been finalized on this basis,” it goes on.
The Commission does not seem to have granted an expedited process as the interventions are due on November 4, and then Corus will have 10 days to reply.
Corus will report on its 2019 fiscal year end on October 18.
