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Re: Broadcasting Notice of Consultation CRTC 2010-952: Group-based licence renewals for English-language television groups

Feb 9, 2011

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Mr. Robert Morin
Secretary General
Canadian Radio-television and
Telecommunications Commission
Ottawa, ON
K1A 0N2

Dear Mr. Morin:

1. Friends of Canadian Broadcasting is an independent watchdog for Canadian programming in the audio-visual system, supported by 150,000 Canadians. We welcome the opportunity to comment and wish to appear at the public hearing to provide the Commission with a viewers' and listeners' perspective on the issues.

2. We note that many of the Commission's proposals intended to increase flexibility for station groups were put forth at a time when the recession depressed the most recent financial information available to the Commission (the 2009 broadcasting year), which called into question the viability of English-language private conventional television.

3. We also note that the Commission's proposals predate the recent upheaval in the ownership structure of English-language station groups. The financial resources of the station groups should now be considered in the context of the financial capacity of the vertically-integrated companies of which they now constitute a part.

4. Just as the BDUs used to insist that the financial capacity of conventional television should be seen in the context of the overall profitability of their respective station groups, so the financial capacity of newly acquired station groups needs to be considered in the wider context of their new ownership structures, including other lines of business such as home phone and Internet. As in many companies, some parts of the overall business cross-subsidize other parts - a cost of doing business. We therefore urge the Commission to consider the capacity of the whole business.

5. We also recommend that the Commission exercise great caution going forward when considering proposals to change the nature of service or programming categories of specialty channels to ensure that they do not lead to a reduction of their 'specialty' (unique program offerings).

6. In recent years, spending on Canadian programming by the English-language private conventional television groups has been close to 30% of the preceding year's revenues:

7. FRIENDS has reviewed the Canadian programming expenditures of the specialty and pay services of the four station groups and compared this total to the level proposed under the Canadian Programming Expenditure (CPE) regime. This research suggests that implementation of the proposed regime would result in a reduction of approximately $90 million annually in Canadian programming spending by the four groups taken together. Note that 51% of this reduction would come from CTV and 46% from Shaw Media:

8. We append to this submission detailed information for each of the station groups, from which the above summary is derived. (See page 6.)

9. The proposed funding requirement for Programs of National Interest (PNI) features a requirement for 5% of total revenues in the preceding year to be devoted to a combination of drama (Category 7) and long-form documentary (2[d]). The following chart shows that Category 7 spending averaged 6.4% of the preceding year's revenue in 2009. While the Commission's published data do not permit identification of spending on sub-Category 2[d], these data indicate that the proposed PNI requirement would reduce combined Category 7 plus 2[d] spending by in excess of $70 million per annum:

10. Achieving a new regime without depressing Canadian Programming Expenditures will require a 32% CPE:

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11. As outlined above, achieving a Programs of National Interest regime without depressing Category 7 programming expenditures would require at least a 6.4% PNI, plus an amount that the Commission could determine based on Category 2[d] expenditures (a statistic which the Commission does not publish):

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12. CTV has argued that the end of analog preference packaging could adversely affect analog revenues. [1] FRIENDS doubts that the BDUs which control this packaging will engage in packaging practices that will negatively affect their own services' revenues.

13. CTV's application also states that "the Commission can no longer expect the larger, more profitable undertakings of a particular corporate group to subsidize the less profitable assets". [2] Why not?

14. Despite the Commission's significant effort to extend flexibility, each applicant has put its hand out in an Oliver Twist-like request: "Please, Sir, I want some more" - asking for a variety of exceptions. One has proposed an exception to the CPE regime for Category B services (a lower 15% CPE). Another has proposed relief from the requirement to spend 75% of PNI with independent producers. FRIENDS recommends that the Commission make no exceptions.

15. Finally, a few comments regarding digital transition. Recent CMRI data indicate that 29% of Canadian households operate at least one analog television to receive over-the-air signals. Three million Canadians rely on analog over-the air signals for their connection to the audio-visual system. Most of them have low incomes and are senior citizens.

16. The isolation they will face with anger on September 1, 2011 will have political ramifications, particularly when they find out that the vacated frequencies that deprive them of their television experience have generated in excess of $4 billion in windfall revenue for the Government of Canada. Yet the government, unlike its American counterpart, has financed no program to subsidize their continued access to television signals they require to stay connected in their communities and to participate as citizens in this country's affairs. These people vote!

17. Yet, the Commission having adopted a digital plan, it is vital that all broadcasters adhere to this plan - including the CBC, which is seeking to subvert the plan in its application for a digital transmitter for CBAT in New Brunswick. Most of the station groups seem to be on schedule to meet the Commission's August 31, 2011 deadline.

18. They should be strongly encouraged to adhere to the Commission's deadline in mandatory markets and should be required to install transmitters in other smaller markets rather than use the digital transition as an occasion to drive customers to Bell TV or Shaw Direct.

Yours sincerely,

Spokesperson

cc: The applicants by email (proof of transmission retained)

For information: Jim Thompson 613-567-9592

ADDENDUM

Friends of Canadian Broadcasting Station Group Renewal Intervention

Station Group Canadian Programming Expenditures for Specialty and Pay Services[3]

*** END OF DOCUMENT***


[1] CTV Supplementary Brief, page 9

[2] CTV Supplementary Brief, page 2

[3] Only specialty and pay services that meet the CRTC station group criteria as outlined in CRTC-2010-952 have been included in this analysis