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Briefing Note: Local TV, Canadian programming at risk in CRTC review – Rid CBC English TV of advertising

Aug 22, 2014

Local TV stations across the land, especially in smaller markets, will shut down and investment in Canadian programs will plummet if Canada’s broadcast regulator, the CRTC, adopts rule changes it has broached in its review of TV policy, according to the watchdog group the Friends of Canadian Broadcasting.

A forecast by broadcast expert Peter Miller of the cost of the regulatory changes the CRTC is proposing concludes the price would be steep. 

According to the forecast, by the year 2020 the changes would result in the loss of 31,460 jobs worth $2.9 billion to the Canadian economy every year, including the loss of $1.6 billion annually and 13, 440 jobs in the broadcasting and production industries.

Miller Forecast Summary

Regulatory Proposal

Projected Annualized Loss by 2020

 

Jobs

Value ($millions)

Simultaneous Substitution

1,050

$135.5**

Unbundling

17,860

$2,050.5

CPE effect on TV production

12,550

$739.6

Total

31,460

$2.925

** Broadcasters estimate the end of simultaneous substitution will cost the industry $450 million in lost revenue annually.

“The CRTC’s proposed changes would be a recipe for station closure and a body blow to Canadian programming. They would make it tougher to meet the worthy objectives of the Broadcasting Act which the CRTC is required to uphold” says Friends spokesperson Ian Morrison.

In particular, Friends points to independent stations in Canada’s smallest markets, like Kamloops, Medicine Hat, Lloydminster, Thunder Bay, and Rivière du Loup as being particularly vulnerable, and even Bell Media’s CTV2 network of stations in London, Ottawa, Barrie, Victoria and Pembroke as being at risk.

In the same submission, Friends advocates in favour of an ad-free CBC English TV.   

“It may seem counter intuitive with the CBC’s financial crisis, but getting out of the ad business would be the first and necessary bold step toward saving CBC from itself and developing a truly distinctive offering,” Morrison said.

To replace the CBC’s lost revenue Friends recommends the CRTC re-direct funds hyper-profitable cable and satellite distribution companies already contribute to create community programing. 

Friends also suggests the CRTC, for the first time, require new media TV companies like Netflix to pay a fair contribution to the Canadian broadcasting system, a portion of which would be directed to the CBC. 

Friends estimates these measures could, over time, direct $150 million annually to CBC.

Already facing financial pain from the shift in ad spending to the Internet and increasing competition from new media services such as Netflix, the Canadian broadcasting system would be further de-stabilized if the CRTC proceeds with rule changes up for discussion in September. 

The CRTC has suggested gutting rules that are the foundation of a TV system that delivers more choice to Canadians than citizens in most countries enjoy, and diversity of programming, local information and reflection, a sense of national identity and a Canadian window on the world through TV.

The proposals include:

Unbundling cable channels - Pick and Pay vs. Pick a Pack

The CRTC could change TV signal distribution to a pick-and-pay model where Canadians choose only those signals they want to buy.   This proposal comes with a steep price.  The Canadian economy could lose almost 18,000 jobs and more than $2 billion if this proposal is adopted, according to the industry forecast submitted by Friends. 

For consumers, whose number one complaint about TV is its cost, the future of pick and pay is not so bright either.   Unless the Commission re-regulates the prices that the big cable monopolies and satellite distributors charge, under a pick-and-pay system, Canadians will pay more and get less choice, especially less Canadian choice.  Both Bell and Rogers have advised the CRTC that the changes will not cut consumer prices significantly. 

It is worth noting that nothing requires the CRTC to introduce pick-and-pay.  Even the Harper Government’s throne speech, which launched this debate in Canada, stated, “Our government believes Canadian families should be able to choose the combination of television channels they want. It will require channels to be unbundled while protecting Canadian jobs.” 

Simultaneous Substitution

The Commission is considering ending simultaneous substitution (simulcast), the system that for five decades has enabled Canadian broadcasters to place ads on the American programs for which they purchase the Canadian rights so that they earn revenue from Canadian viewing of those shows on U.S. border stations. Simultaneous substitution is a fundamental underpinning of all Canadian broadcasting. The loss of simulcast would jeopardize the whole business model of investing profits from airing U.S. programming to subsidize Canadian programs, and with them, the viability of many local TV stations across the country, especially those in smaller markets.

A likely outcome would be the closure of a number of small-market independent TV stations and the CTV 2 Network. In its 2011 Group renewal, Bell cited the challenges facing this group of stations, and could only guarantee their operation for a limited number of years.  A fundamental change in regulatory environment such as the loss of simulcast would provoke that decision.  As it would for many smaller local TV stations, already hit severely with the recent loss of the Local Program Improvement Fund.  The Commission would justifiably be held responsible for the surrendering of multiple licences which provide valuable services to Canadians.

 “Rather than gutting the underpinnings of a great system, the CRTC should support Canadian programming, strengthen diversity in the system; and use its authority to affirm the cornerstone place of the CBC,” Morrison says.

SMITS Coalition members

Membership of the SMITS Coalition currently consists of the following 9 broadcasters who, combined, operate 19 stations:

  • Jim Pattison Broadcast Group (3 stations; 2 in BC & 1 in Alberta)
  • Newcap (2 stations in Alberta)
  • Thunder Bay Television (2 stations in Ontario)
  • Corus (2 stations in Ontario)
  • RNC Media (3 stations in Quebec)
  • Télé Inter-Rives (4 stations in Quebec)
  • Miracle Channel, Lethbridge
  • Newfoundland Broadcasting, St. John’s
  • CHEK TV, Victoria BC1

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For information: Jim Thompson 613-447-9592 Ÿ jim@friends.ca Ÿ www.friends.ca

Related Documents:

Aug 22, 2014 — Brampton Guardian  — CRTC proposals too costly; watchdog group by By Terry Pedwell
FRIENDS says some local TV stations will be forced to close and more than 30,000 people could lose their jobs if Canada's broadcast regulator adopts changes it wants Canadians to consider.