GATINEAU – Many parties to the CRTC’s local and community TV consultation have proposed funding approaches (each with their own acronyms we’re having trouble keep track of) which could financially support these struggling services. Rogers Communications Inc. has now joined them, unveiling its own approach to a local programming fund.
In its appearance before the Commission on Thursday, the media and communications giant argued while it still prefers its original proposal calling for greater flexibility to move local programming funds from larger to smaller markets, it offered up another model that it says is workable and would provide financial benefits for local programming. The fund would remain at 5% of BDU contributions but would be divided as such: 3% to eligible production funds, 1.5% to the community channel, and 0.5% to a new Local News and Information Fund (LNIF). Rogers calculates that would create an annual fund worth about $33 million.
There are four key elements to its plan: a harmonization of contributions from cable and IPTV providers, a multiplatform requirement, minimum local news commitments from community channels, and the LNIF. The Small Market Local Programming Fund (SMLPF) would also be bolstered slightly as DTH distributors would see their contributions to the fund increase to 0.5% to be the same as terrestrial BDUs.
“The result of the fund would be to sustain local programming expenditures despite revenue declines in the conventional television sector,” argued Rick Brace, president of Rogers’ media business unit, in his opening remarks. “For some groups, LNIF funding may represent new investments in local news and information programming. For others, it will allow them to sustain their current expenditures in local news and information programming that would otherwise not be possible given revenue declines.”
“It’s also a great deal of running to not move very far forward.” – David Watt, Rogers
Under questioning, David Watt, senior VP of regulatory at Rogers, asserted that its funding approach is a “distant second best solution”, is far from appropriate and in a nutshell is a lot of work for little return.
“It’s also a great deal of running to not move very far forward,” he said.
To explain his comment, Watt outlined how Bell’s funding model, which has a more generous news component than the Rogers’ plan, would work. Bell would net $10 million from the fund (it would pay in $14 million but receive $24 million out of the $66 million fund). Shaw Communications would receive a net of $7 million, while Quebecor Media would lose about $7 million. Rogers itself would pay in $16 million but only be able to pull out $4 million.
“Where I’m going here is (Bell’s) $66 million fund looks like there’s going to be a lot more money here to devote to local news and information programming. That’s not really true. It’s shuffling to a large extent money from the right pocket to the left pocket,” said Watt. “The unambiguous winners, and they certainly are the most deserving, would the independents and then there are very small amounts of funds for CBC and others. And then the absolute unambiguous losers are Cogeco, Eastlink and Telus – those who do not have broadcast properties.”
Cross-subsidization has been raised a number of times throughout the first four days of the hearing and Rogers addressed it during its testimony. Brace acknowledged that operating divisions must stand on their own, but noted that the playoff appearance of the Toronto Blue Jays was the reason why Rogers Media made its numbers last year. Cross subsidization can only go so far, he added.
“The cross subsidization will be there but in a declining environment, you can cross subsidize all you want, but it does the law of diminishing returns and at some point you have to address what isn’t working,” said Brace.
Rogers also used to appearance to criticize CACTUS’ community TV proposal. Colette Watson, the company’s VP of TV and broadcast operations, questioned the community TV association’s model on a number of fronts including implementation and the problem it’s trying to fix. On implementation, how could giving them $96 million in infrastructure costs and then $150 million in community TV funding be justified, she wondered.
While Watson lauded the idea of partnering with libraries, she questioned whether this meant that libraries “would teach editorial integrity, would teach a volunteer how to interview a politician. Are they going to replace journalism schools now?”, she asked. “Those are the kinds of questions I would have of the scope of the idea that they have.”
“These license conditions would act as a hedge against further cost cutting of local news.” – Randy Kitt, Unifor
The union representing a majority of broadcast industry employees, appearing after Rogers, recognized that times are very difficult for local TV. Unifor argued that while Bell Canada’s Local News Fund (LNF) is on the right path, more needs to be done such as creating a new local programming expenditure (LPE) requirement for news similar to other financial obligations imposed on broadcasters and distributors by the CRTC.
“Each licensee’s LPE should be pegged at no less than its 2014-2015 expenditures on local programming. These license conditions would act as a hedge against further cost cutting of local news,” said Randy Kitt, chair of Unifor’s media council.
French language small market broadcasters RNC Media Inc. and Télé Inter-Rives ltée also stated their case for additional financial resources on Thursday. The companies offered a view similar to that the Small Market Independent Television Stations Coalition (SMITS).
Raynald Brière, president and CEO at RNC Media, noted under questioning that the respective firms have already done what they can in terms of cutting costs and finding synergies as revenue dropped. But now they are at a point where revenue has declined and continues to decline at such a rate that there aren’t any more costs to cut, and that additional financial assistance is the only option.
CBC/Radio-Canada, Quebecor Media and the Canadian Cable Systems Alliance are among the witnesses on Friday.
