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Local TV in crisis: A Briefing Note

Jan 20, 2016

AT ISSUE

Starting Monday, January 25th, the survival of local TV in Canada will be the focus of a public hearing convened by the CRTC, Canada’s broadcast regulator. 

This examination can’t come fast enough.  Even though local TV is highly valued by viewers, as a sector it is bleeding red ink and has been for years.   Since 2010, private conventional TV has seen revenues drop by approximately 25%.

A combination of factors has brought local TV to its knees including economic, technological and audience behavior changes affecting the industry as a whole, as well as removal of regulatory protections and public subsidies to support this valued and particularly vulnerable sector.

Without action from the CRTC at this hearing, the future of this neglected but loved sector looks bleak.  Something has to give.

Ian Morrison, spokesperson for the watchdog group FRIENDS of Canadian Broadcasting will attend the hearing on Monday morning and will be available for comment on-site.  Morrison is scheduled as the second witness on Tuesday, January 26th.

AT STAKE

For viewers, journalism and local stations, the stakes are extremely high.

Local Stations

  • Independent (i.e. not owned by a vertically integrated company such as Bell or Rogers) stations serving small and medium-sized markets are the most vulnerable to failure.
  • Near Term Prospects for Local TV in Canada, an economic forecast from broadcast consultants Nordicity and Peter Miller and submitted to the CRTC by FRIENDS, predicts that more than half of local stations in small and medium sized markets will fade to black by 2020 in the absence of action by the CRTC.  These are markets where there is no local TV alternative.
  • Bell Canada, owners of a network of 30 local “CTV2” stations has already advised the CRTC that it could close as many as 20 of its local stations by September 2017.  And the Coalition of Small Market Independent Television Stations (SMITS), which represents independent TV stations in small and medium-sized markets has told the Commission that station closures are imminent.

Local journalism

The Nordicity/Miller forecast also found that:

  • Almost half (910 of 2090) of the people who work to put news and other programs on the air at local stations in small and medium-sized markets will lose their jobs.
  • Job loss balloons to 3490 when large market stations are included.

Local viewers

  • In the absence of CRTC action, viewers in 20+ already underserved small markets in Canada will be affected by the closure of their station as early as 2017, according to the Nordicty/Miller study.
  • Counting medium-sized markets, almost 30 communities are forecast to lose their local station.
  • 100 hours of local programming weekly will be permanently lost including local news and information programs that are central to life in smaller Canadian communities.
 

Forecast number of station closures

Current number of stations

SMITS stations1

9

19

Bell CTV-2 small/medium-market stations in Ontario

3

4

Bell CTV & CBC affiliate small/medium-market stations

9

14

Shaw small/medium market stations

4

7

Quebec small/medium-market stations (excl. SMITS stations)

4

12

Total

29

56

KEY ISSUES

Some of the key issues on the table next week are:

Local TV is important to viewers and voters

A September 2015 Nanos Research survey found Canadians highly value local TV, especially local news, and want their federal MP to work to keep it strong.

  • Nine in ten (92%) of those surveyed either agree (78%) or somewhat agree (14%) that local TV news is valuable to them.
  • Eighty-five per cent of surveyed Canadians either disagree (74%) or somewhat disagree (11%) with the statement that they wouldn’t care if local news broadcasts on TV were no longer available to them.
  • Nine in ten respondents either agree (73%) or somewhat agree (17%) that their federal member of parliament should work to keep local broadcasting strong in their community.
  • Three quarters of those surveyed agree (48%) or somewhat agree (27%) that they trust the CRTC to make decisions that will ensure their local TV station is not forced to close.

Helping or hurting local TV in Canada?

In addition to harsh business realities, a number of policy decisions by the CRTC and the federal government have made matters worse for local TV in Canada.

  • At its peak in 2012, the Local Program Improvement Fund -- introduced by the CRTC in 2009 in recognition of the headwinds faced by local TV -- pumped almost $112 million in to local TV and local programming in Canada.  However, the CRTC phased out the LPIF in 2014, based on an apparent (and as it turned out, very short lived) “general rebound in the aggregate advertising revenues of conventional television stations”.
  • The CRTC decided to eliminate simulcast on the Super Bowl effective Q1 2017. According to evidence tabled at with the Commission, the negative revenue impact of eliminating simulcast on live events such as the Super Bowl on CTV alone is $40 million annually, and this estimate does not take into account the negative downstream effects on small market affiliates and the promotion of Canadian and other programming.
  • On August 14, 2015, the former Government endorsed a plan to repatriate broadcast spectrum (600 MHz) in synch with the U.S., but without the compensation for affected Canadian broadcasters that the U.S. has committed its local TV stations. In the result, Canadian local broadcasters face a one-time cost of as much as $500 million over the next five years to relocate their over-the-air (OTA) channels, at no benefit to them, so spectrum can be sold to wireless operators.

Support for Local TV in the United States far outstrips Canada

While government policy in Canada has hobbled local TV, it’s a completely different story south of the border.  In the U.S., a series of measures enacted over the last fifty years have strongly protected local broadcaster programming rights, allowed negotiated fees from carriers and guaranteed recompense for spectrum relocations. Canada has chosen not to implement such measures, or has pulled back where such protections existed. As a result, U.S. local broadcasters are far more financially secure and face a far more secure future.

What is the CRTC suggesting?

Heading into next week’s hearing, the CRTC has published a discussion document intended to outline its current take on key issues.

The Commission has suggested a fund dedicated to supporting local TV be established while restating its view that there is sufficient funding in the TV system currently to adequately support local TV in Canada.  Evidence submitted by FRIENDS disputes this view, suggesting this approach will short change local TV, or undermine support for other key foundations of Canadian television, or both.  FRIENDS writes:

“The notion that support for local TV must of necessity conform to a “rob-Peter-to-pay-Paul” approach (that is, support must come from existing BDU contributions) is also completely unacceptable.  As a stop-gap determination, it may or may not work.  But, as a going-in requirement, it has no place in a proceeding such as this.”

-30-

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

FRIENDS brief to the CRTC is available here.


1 The SMITS Coalition includes:

  • Jim Pattison Broadcast Group - stations in BC (Kamloops and Prince George) and Medicine Hat, Alta.
  • Newcap - 2 stations in Lloydminster, Alta.
  • Thunder Bay Electronics - 2 stations in Thunder Bay, ON
  • Corus - CKWS Kingston & CHEX Peterborough
  • RNC Media - 3 stations in Quebec – 2 Rouyn-Noranda; 1 Val-d’Or
  • Télé Inter-Rives (4 stations in Quebec – 3 in Rivière du Loup; 1 in Carleton)
  • Miracle Channel, Lethbridge, Alta.
  • Newfoundland Broadcasting, St. John’s
  • CHEK-TV, Victoria