GATINEAU – When Allarco won a pay television licence back in 2006, some wondered whether the company had promised too much in order to win the licence during a very competitive process. Those questions remained valid on Tuesday when Allarco/Super Channel appeared in front of the Commission for the renewal of its licence and to answer serious questions of non-compliance during its last licence term.
“The Commission is concerned with the way in which Allarco has interpreted the regulatory obligations and policies relating to Super Channel, CRTC Chairman Ian Scott started in his opening remarks. “In particular, it appears that the licensee is in non-compliance with certain requirements, including those relating to the distribution of Canadian programs, the eligibility and payment of certain Canadian programming expenditures, and expenditures dedicated to regional outreach programs, and script and concept development.”
“Having a broadcasting licence is a privilege that comes with certain responsibilities and obligations,” he went on. “At this hearing, Allarco will have to demonstrate why the Super Channel’s licence should be renewed and not suspended, revoked or renewed for a shorter term with or without the imposition of mandatory orders. Each instance of apparent non-compliance will be evaluated on the facts,” he concluded.
Then Super Channel’s CEO read his opening remarks, highlighting their contribution to the Canadian broadcasting system while trying to manage the difficulty of being an independent broadcaster in the era of the Netflix.
Then the questions started – and it was soon obvious that Super Channel was not in sync with the Commission. For a while, the chair was asking questions and seemed frustrated when he didn’t get clear answers.
Allarco was reluctant to admit “errors” had been made with such things as the distribution of Canadian programs, eligibility and late payment of certain Canadian programming expenditures, and the eligibility of certain expenditures devoted to regional outreach programs and it became obvious on Tuesday that Super Channel, after going through two CCAA (bankruptcy protection) processes, has emerged deeply wounded and it has no intention to fail again.
The president and CEO of Allarco, Don McDonald, repeated a few times that going forward, the business has to survive on its own, and he also noted the chairman of Allarco, Chuck Allard, had already invested $135 million in this business but would not spend any more.
According to its most recent filings with the CRTC, for the broadcast year ended August 31, 2018, Super Channel earned $29 million in revenue, an increase of 3% over 2017, but decrease of 24% over its 2014 revenue line. It spent $7.4 million on Canadian content in 2018, 16.5% more than 2017, but 31% off its historic high spend on Cancon in 2016. It does not file subscriber totals. The company has restructured its channel offerings, too, seeking larger, more diverse audiences and recently shuffled its executives. It's launched a lawsuit to try and protect itself from piracy, as well. The channel is fighting for its life on a number of fronts.
McDonald was also initially adamant that he would not pay back any shortfall in Cancon spending. At the end when Commission’s legal counsel asked him to comment on the imposition of a mandatory order requiring Allarco to make up the regional outreach shortfall and McDonald answered that he would not do that – and the room sort of stood still.
Senior council then clarified to ask whether he would comment on the imposition of such mandatory order and he agreed to take that away as an undertaking.
“What assurances can you give the Commission about your financial ability in the future,” asked Québec commissioner Alicia Barin who was at her first hearing as a commissioner but showed poise and gravitas.
The question was asked several times, including by the chairman who asked it again at the conclusion, revealing he was likely not convinced by what he heard previously.
It seems likely the Commission is leaning towards a tight leash of reporting, mandatory orders and short renewal period for Super Channel while the questions of whether or not Allarco has the financial viability to meet its regulatory obligations and if it will abide by any such stringent orders hang over the proceeding.
Allarco’s undertakings are due in writing, on November 14th.
As a regional independent broadcaster based in Alberta, which has provided another door to independent producers to knock on over the years, Super Channel has “done more good than bad,” as they noted Tuesday, but the Commission is clearly running out of patience.
Super Channel’s existing licence expires in March 2020.
