OTTAWA – The local news business, while still attracting eyeballs, has ceased working from a financial perspective, Bell Canada told a Parliamentary committee on Tuesday. Echoing its appearance in front of the CRTC earlier this year, the company argued in front of MPs that creating a fund dedicated to local news programming would definitely help counteract falling advertising revenue.
Speaking at the House of Commons Standing Committee on Canadian Heritage, Wendy Freeman, president at CTV News, noted that 2011 advertising revenue from private Canadian conventional TV stations has declined by $325 million, $91 million at Bell Media stations alone. The last broadcast year saw only five of the company’s conventional stations make a profit, she added.
Freeman described the local television situation as being in “a permanent structural decline.” The major problem stems from the fact that advertisers are increasingly shifting their spend to the digital environment. The result is that local TV is “trading big advertising dollars for digital dimes.”
Bell argued in its opening remarks and under questioning that the solution lies in creating a fund that would be dedicated to paying for local news. Kevin Goldstein, VP of regulatory affairs for content distribution at Bell, told the committee that reallocating a portion of broadcast distributors’ local TV contributions to a local news fund, and then tying access to that money to going beyond minimum regulatory requirements, would be a good way to help sustain local TV.
This new fund wouldn’t be a handout, he stressed. Rather, a broadcaster would commit to expanding local news and one-third of those costs would be covered by the fund. The broadcaster would have to put up the balance. Under Bell’s proposal, which was fully explored during the CRTC’s local and community TV hearing in January, the company would receive approximately $20 million a year.
In addition to the shift to digital advertising, there are other factors at play affecting the viability of local TV. Cord cutting and cord shaving as well as the new regime touting a skinny basic package and smaller channel tiers (with full pick and pay coming in December) are putting pressure on the specialty and pay parts of the business.
The specialty and pay parts of the business used to help to prop up local TV. But that’s not the case anymore, said Goldstein.
“You’ve now got a situation where the healthy division isn’t as healthy and the less healthy division is even less healthy.” – Kevin Goldstein, Bell Media
“You’ve now got a situation where the healthy division isn’t as healthy and the less healthy division is even less healthy. So there comes a point in time where if you continue to subsidize, you actually aren’t just throwing good money after bad, but you’re actually impairing the business that it’s actually subsidizing,” he explained.
Bell explained that it will also be forced to give up some frequencies in the 600 MHz band – airwaves used by local TV stations to broadcast their signals over the air. Innovation, Science and Economic Development (ISED) will auction a portion of the band in 2017, and Bell wants a piece of the revenue, which Goldstein estimated would earn about $5 billion at auction, to help pay for moving to other frequencies.
Asked later in the meeting about the two best solutions to the problem, Goldstein said that it’s about a secondary revenue stream and solid rights protection.
“The two best would be a secondary revenue stream for local television, whether that’s a fund or takes the form of a value for signal/fee for carriage regime like they have in the U.S., where local television stations are thriving,” he said. “The second one would be to ensure that over the air local television stations have the best rights protection, such as simultaneous substitution (simsub) and things like that, to ensure that out-of-market stations don’t pull audience from their programming.”
Simsub is a big concern for Bell. The company has long argued that the CRTC's plan to do away with it for the Super Bowl will result in a multi-million loss of advertising revenue. This is the subject of a court case that Bell has filed, too.
The Canadian Association for Community Television Users and Stations (CACTUS) also appeared on Tuesday, arguing that more money should go to community TV. Catherine Edwards, executive director of the association, noted that the community sector represents the best option to reflect local communities on TV and in the digital sphere.
“The community sector offers the biggest bang for the buck to reflect our communities in our all media. They money is there, it just needs to be deployed effectively,” she said in her opening remarks.
Edwards called on the community to recommend that Canadian Heritage develop a digital community media policy that includes old and new media.
“Secondly, we should create a community access media fund to support community operated digital production centres. Third, we should direct BDU subscriber revenues for community TV to this fund. And lastly, the service delivery via the fund and community centres needs to be coordinated with four other ministries,” she said, pointing to ISED; Employment, Workforce and Labour; the Ministry of Democratic Institutions; and the Ministry of Infrastructure and Communities.
