By Ken Kelley
OTTAWA – In an already competitive landscape where ad dollars are becoming tougher to secure, the Covid-19 pandemic piled yet a new challenge on top of several long-simmering issues for independent broadcasters in the country.
Appearing virtually before the Standing Committee of Finance, Luc Perreault, an advisor to Stingray (and former Pelmorex executive), outlined the challenges the Independent Broadcast Group (IBG), a consortium of 10 independent Canadian TV broadcasters, have seen over the last three months.
“We estimate the broadcast advertising market has shrunk by 50%, or more since January,” Perreault said. “Before Covid-19, the Canadian ad market was already challenged by the growing dominance of large, non-Canadian digital platforms like Google and Facebook, which are cutting into the broadcast ad market in much the same way they are siphoning revenue from the newspaper industry. Covid-19 has made the situation much worse.”
As well, thanks to the high levels of concentration of ownership and vertical integration that dominate the domestic market, independent broadcasters have a tough fight on their hands, every day, battling for viewers and revenue.
“In 2018, four Canadian enterprises – Bell, Rogers, Shaw and Quebecor – held 73.4% of the $86.2 billion generated by media in Canada. The five largest BDUs in Canada represent 88% of the sector’s revenues and those same enterprises represent 91% of conventional Canadian private television and 83% of subscription services.”
Despite having a considerably smaller piece of the pie in Canada, Perreault reiterated how independent broadcasters continue to play an important role in the country’s broadcasting landscape.
“Independent broadcasters represent fully 40% of direct employment in the Canadian broadcasting sector,” he stated. “We represent 69% of jobs in commercial radio, 39% of jobs in discretionary television, and 14% of jobs in conventional television. In a recent study, it was estimated the independent sector accounts for more than 28,000 (full time equivalent) positions annually in Canada through our direct operations and through our production and international distribution activities.”
“We propose an enhancement of the existing tax deduction for advertising on independent Canadian broadcasters. The deduction would be increased to 130%, and would help level the playing field in an environment that heavily favours Canada’s largest broadcast groups.” – Luc Perreault, IBG
Perreault said the IBG, consisting of members including Aboriginal Peoples Television Network (APTN), BBC Kids, Ethnic Channels Group, Hollywood Suite, OutTV Network, Stingray, Super Channel, TV5 Quebec, Channel Zero and Zoomer Media, enthusiastically supports the extension of the Canada Emergency Wage Subsidy (CEWS), which began in March.
He said the subsidy has played a critical role in helping independent broadcasters maintain employment levels over the last three months, but especially so for those businesses that have seen a significant drop in ad revenue, something we reported on this week.
Speaking on behalf of the IBG, Perreault presented the committee with a list of proposed measures they feel could help provide members further relief. “We propose an enhancement of the existing tax deduction for advertising on independent Canadian broadcasters. The deduction would be increased to 130%, and would help level the playing field in an environment that heavily favours Canada’s largest broadcast groups,” he said.
The IBG also voiced support for an extension of the news content tax credit, originally developed for the print industry, to news programming produced by independent broadcasters, like its members.
“Third, we support the reimbursement of 600 MHz transition costs for independent broadcasters,” he said. “These costs are being incurred to free up spectrum for other uses, including mobile use. All of Canada’s large media conglomerates also operate mobile phone businesses and will benefit from the transition. Independent broadcasters bear the same costs, but will not benefit in the same way. They should be compensated.”
Perreault is referring to Industry Canada’s decision to have Canadian broadcasters migrate to digital OTA transmission in 2011. But, as discussed in an interview with Channel Zero President Cal Millar, wireless providers then purchased access to the 600 MHz band via spectrum auctions, resulting in broadcasters needing to prepare for yet another move by 2022. The Local Independent Television Stations Group of the Canadian Association of Broadcasters estimate it will cost members around $10 million to make the required changes.
