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Re: Final Submission: Broadcasting Notice of Consultation CRTC 2010-952

Apr 27, 2011

Group-based licence renewals for English-language television groups

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

Dear Mr. Morin:

Category 7 Spending and Programs of Nation Interest

FRIENDS appeared before the Commission on April 11, 2011 and was questioned by Vice-Chair Pentefountas on the subject of Programs of National Interest (PNI) and specifically the category by category expenditures shown below which were also included in FRIENDS initial February submission.

5816 COMMISSIONER PENTEFOUNTAS: I understand the values, but your math here, it's based on information you have, and you stand by those figures.

5817 Is that correct?

5818 MR. MORRISON: Of course. I mean, I wouldn't come before you and say I did not stand by anything that I wrote to you on behalf of the Friends of Canadian Broadcasting.

5819 I could be wrong, but, if so, I'd be wrong in the form of an honest mistake.

5820 COMMISSIONER PENTEFOUNTAS: An honest mistake. Well, you're basing yourself on figures. You're confident in your figures, otherwise you wouldn't put them down on paper and make these representations this morning.

FRIENDS wishes to reiterate that the sole source of the data used in this submission was from the Commission's Statistical and Financial Summaries 2005-2009 as noted at the bottom of the chart. FRIENDS has not changed any of these numbers. As CPE commitments are generally based on the previous year's revenue, 2008 revenues were used while expenditures shown are drawn from 2009 data as shown.

During the discussion on PNI program expenditures with Vice-Chair Pentefountas, Commissioner Cugini added the following:

5824 COMMISSIONER CUGINI: Just one correction, Mr. Morrison.

5825 But these figures are based on specialty and pay services. You have not taken into account conventional television spending?

5826 MR. MORRISON: This is based on everything, Commissioner Cugini.

5827 COMMISSIONER CUGINI: But it says expenditures of the specialty and -- on page 2:

"FRIENDS has reviewed the Canadian programming expenditures of the specialty and pay services ...and compared this total to the level proposed under the Canadian Programming Expenditure regime."

FRIENDS would like to point out that in the conversation with the Vice-Chair, the discussion was based solely on current Category 7 expenditures by comparison to the proposed PNI of 5%. Accordingly, the chart being discussed was based on total conventional and specialty expenditures as shown.

Commissioner Cugini's reference is correctly quoted, but refers to a separate analysis done on specialty spending and was unrelated to PNI spending.

In summary, our argument is that in 2009, Category 7 expenditures by private conventional, specialty and pay services constituted 6.4% of total Canadian program spending. As the proposed new PNI category would also include programming from Category 2 (d) which is not separately reported, FRIENDS made the assumption that the combined total would be greater than 6.4% and certainly much higher than the 5% combined in the Commission's PNI proposal.

Specialty & Pay Canadian Program Spending

A cornerstone belief in FRIENDS submission is that under a combined 30% CPE including conventional, specialty, and pay, that total Canadian program spending will decline. This belief is based on a detailed study of each of the channels that qualified under the Commission's Notice of Consultation and is based on current CPE Conditions of Licence and current spending as well as projected spending at 30% as shown in the following chart which formed part of our original submission.

As previously noted, we believe that Commissioner Cugini's reference was to the above chart, which is based on Specialty and Pay totals only and is not related to the earlier discussion on Category 7 expenditures.

5825 But these figures are based on specialty and pay services. You have not taken into account conventional television spending?

5827 COMMISSIONER CUGINI: But it says expenditures of the specialty and -- on page 2:

"FRIENDS has reviewed the Canadian programming expenditures of the specialty and pay services ...and compared this total to the level proposed under the Canadian Programming Expenditure regime."

Commission Cugini's assertion that FRIENDS has "... not taken into account conventional television spending" is, in this context, correct. In preparing our submission, we employed only data that has been published by the CRTC. As the Commission provides only aggregated data for private conventional television, it is not possible to build a model that included conventional spending by individual broadcast group.

We noted, however, that conventional Canadian program spending over the past five years averaged approximated 30% when there was no CPE requirement. We also noted that a significant portion of this spending was in news, which is generally profitable for many Canadian television stations, and we knew that the Commission intended to maintain PNI spending of at least 5%. Accordingly we made the assumption that conventional spending would continue to approximate 30% and, therefore, focused our analysis on specialty and pay services only where they could be individually identified by company and service.

We trust that the foregoing resolves any misunderstanding that the Commission might have had with either our written or oral submissions.

We thank you for the opportunity to participate in this consultation, and attach evidence that this submission has been copied to the applicants.

Yours sincerely,

Ian Morrison
Spokesperson

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