GATINEAU – The most immediate impact of the CRTC’s Monday announcements? It looks like A Channel Windsor will get a reprieve.
The Commission today finalized the new $102-million fund that is meant to tide broadcasters over until it figures out how to completely reset the scales of power of the industry it regulates with yet another hearing on the TV business come September.
"Canadians have made it abundantly clear that they value local programming," said CRTC chairman Konrad von Finckenstein, in the press release. "We have taken steps to ensure that broadcasters, and particularly those in smaller markets, continue to provide Canadians with programming that reflects their needs and interests."
The new Local Programming Improvement Fund is still for broadcasters serving markets of less than a million people, but it’s half a percentage point bigger, is no longer tied to incremental programming increases, and arrives coupled with the promise that fee-for-carriage (or in the Commission’s and broadcasters re-branding of the issue, value-for-signal) is probably going to happen in some way. The Regulator will re-analyze their reanalysis of that issue as part of a wide-ranging hearing beginning September 29th.
“So you were right,” Rogers vice-chairman Phil Lind told us today in an interview, referencing a piece we ran back in late 2006 predicting FFC was going to happen. (Ed Note: Given the two-and-a-half years that have passed since that prediction, Mr. Lind is being overly generous.)
Come September 1st this year, Canadian distributors (cable, satellite and telco TV companies, or broadcast distribution undertakings) will have to begin monthly payments of 1.5% of their annual revenues (the $102-mil estimate) into the LPIF. The money will be distributed to stations in mid-sized and small markets to make local TV – shows that are produced within those markets like local newscasts and magazine programs.
The fund was created last fall by the Commission as a 1% add-on to the 5% of revenues distributors already pay to fund local content, Canadian drama and other Cancon.
Of course, distributors have come down universally against both the LPIF and fee-for-carriage, saying it will only increase their customers’ bills and add nothing to their viewing experience. Rogers Communications says the new fee will add $0.90 a month to consumer cable bills and fee-for-carriage, up to $6 a month.
"Our customers are already paying 5% of their cable bill to finance Canadian programming. With this new hidden tax of 1.5%, the contribution will total 6.5%. In the current economic climate it is indecent to increase the burden on consumers. In the name of our customers, we strongly oppose this situation and we intend to fight," added Robert Depatie, president and CEO of Videotron.
“The big thing for us obviously is to negotiate fair market value for the distribution of our programming,” responded CTV’s executive vice-president of corporate affairs, Paul Sparkes, in an interview Monday. “It’s key to the future viability of local television and the Commission has recognized that.”
But is it good enough to save CHWI-TV Windsor, CKNX-TV Wingham and CKX-TV Brandon? Yes for Windsor. No for the other two. While Wingham (which is basically just a TV tower and a single employee, said Sparkes) will be closed, CKX (one of the few remaining CBC affiliates) has had some interested parties take a look. “There have been people kicking the tires there, but to be fair to the employees, we’ll have to let them know soon what the deal will be.”
As for Windsor, however, “I’m hopeful at this particular time we’ll find a solution for Windsor, given the increase,” added Sparkes.
The changes won’t help Canwest hang onto the three E! branded networks out west (CHBC-TV Kelowna, CHEK-TV Victoria and CHCA-TV Red Deer). It is selling or closing those as of August 31st, no matter what, said Canwest’s senior vice-president of regulatory and government affairs Charlotte Bell. (The company agreed to sell CHCH-TV Hamilton and CJNT-TV Montreal to Channel Zero last week.)
“The LPIF would help, but by no means does it offset the losses for those stations,” she told Cartt.ca. So the company is still pushing for a sale. “That would be our preferred route,” she added.
As for new money for broadcasters from consumers, Bell says their surveys show people think they are already paying for their local stations via their cable bill. “They’ve always paid for those signals. The issue for us is we’ve never received a portion of the fee they already pay,” she said.
And with the new fee (and impending new ones), “we would hope that the cable companies and the satellite companies wouldn’t pass it on to the consumer.”
In the spring of 2008, during the Commission hearing into policies governing broadcast distribution undertakings (BDUs, or cable/satellite and telco TV companies), broadcasters insisted that local stations needed more money in the form of a fee-for-carriage of their signals if they were to survive.
This is not a new development. It dates back to the ’50s and ’60s when cable first came on the scene, retransmitting OTA signals to customers despite the catcalls and court filings which came from broadcasters who called them “pirates” for doing so, even as those nascent companies brought broadcast signals to new viewers – and far more clearly than the OTA technology available at the time.
Over the years though, the Canadian broadcasters’ regulatory bargain grew and worked for them as the Commission brought in new rules to help, forcing cable to perform simultaneous substitution of Canadian signals over top of American broadcasts when the programming was the same. Local TV signals are also mandatory channels which distributors had to carry – and in low places on what was truly a dial at the time.
Local TV broadcasters are also the only ones permitted to sell TV ads in their markets too, an advantage they continue to hold today as cable can’t solicit advertising on their community channels nor can anyone sell the local avail ad time on American cable channels.
However, our ever-fragmenting media world has combined with a vicious recession to yank the rug out from under Canadian broadcasters in 2009 and their cries for help have grown louder, reaching a crescendo during and after this spring’s abridged license renewal hearing, because even as late as last fall, the chairman von Finckenstein told those broadcasters they hadn’t made a compelling case for any fee for carriage.
“We’re already subsidizing Canadian over-the-air broadcasting tremendously,” added Lind today, “with the Canadian television Fund, with simultaneous substitution… and now with LPIF, this is unbelievable.”
Lind says Rogers will fight this decision and any move to FFC, however it can. “We’ll explore every avenue possible,” he said, but wouldn’t elaborate on whether that would mean some sort of court action or an appeal to Federal Cabinet.
These new fees, warns Lind, are just going to drive Canadian viewers away. “The consumer does not have to take cable or satellite. They can go elsewhere and these kinds of adventures are going to force that to happen.”
The Commission and government has felt compelled to act (remember, the CRTC knows the P&L numbers of the broadcasters, we don’t) quickly thanks to the recession which has hurt traditional media companies. Carmakers and retailers, for example, have dramatically cut their ad spending, leaving conventional broadcasters struggling,
But an economic downturn is no reason for a regulatory overhaul, adds Lind. “Our position is that this is a recession and we’ll get out of it and survive as a TV network… the consumer is about to be really hammered here by the CRTC.
“We’re going to fight it.”
(Ed Note: The Commission also officially issued the terms of the year-long license renewals for broadcasters, too. New long-term licenses will be issued based on the new policies arising from the hearings in September.)
