Re: BN CRTC 2011-788 – Review of Local Programming Improvement Fund
Feb 15, 2012
Mr. John Traversy
Dear Mr. Traversy:
- Friends of Canadian Broadcasting is an independent broadcasting watchdog supported by 175,000 Canadians. We welcome the opportunity to comment on the future of the Local Programming Improvement Fund (LPIF) and we do not seek an opportunity to appear at the April 16, 2012 public hearing.
- At the onset of the recent recession, your Commission stepped in to save local programming on over-the-air television stations in Canada's smaller and medium-sized urban centres, and you succeeded!
- Friends congratulates the Commission on the outstanding success of the LPIF in stabilizing and maintaining local programming in many Canadian communities, where its demise was widely expected, and much feared.
- As you know, Canadians value local television services more highly than any other type of programming. Research which we have previously introduced in CRTC public hearings, notably from Canadian Media Research Inc., clearly demonstrates this fact.
- Your LPIF policy has substantially levelled the playing field between anglophone and francophone communities while ensuring a minimum base of locally generated programming in small and medium-sized communities, thereby reducing the disparity in the availability of local programming between them and Canada's largest urban centres.
- Of course, many of these smaller and medium-sized communities possess only a single local station, which augments the importance of maintaining and building upon what you have achieved over the past three years.
- While in many such communities local stations operating in a traditional programming model have been stabilized at a daily average minimum of one hour of local programming, Friends wishes to underline how the LPIF has made possible a vastly greater quantity of local programs in the breakthrough programming model of Channel Zero (CHCH Hamilton), where LPIF is now underpinning almost eleven hours of local programs daily.
- CHCH is the poster-child of a new broadcast model that your policy has made possible. Canadians everywhere would be very well served if this innovative model were to influence the programming strategies of local stations elsewhere throughout the land.
- You have asked whether incremental local programming should be a condition of receiving LPIF funding in future. Our advice is that you should craft a policy that is adaptable to varying local conditions. Where stations are operating on a PBIT  below 15%, for example, we would not support incremental programming as a condition of access to the Fund. Were PBIT to reach the level of cable monopolies, on the other hand, clearly incremental local programming would become an appropriate condition.
- We favour delegating to local decision-making the balance between local news programming and other local programming categories, all within the CRTC 2009-406 definition of 'local programming', which we endorse.
- We recommend dropping the criterion based on the national pick-up of local news stories. We consider such a requirement as entirely extraneous to evaluating the success of local programming.
- In the LPIF policy, you stated that "in view of the performance levels of the BDU  sector and the benefits accruing to BDUs as a result of other changes being made to the regulatory framework, the Commission is of the view that there is no justification for BDUs to pass along any increased costs relating to the LPIF estimated to be on average approximately $0.50 per month to their subscribers".
- We note that your Commission's confidence in the BDU sector was entirely misplaced. Not only did the BDUs pass along the cost to subscribers, but also competed with one another in a contest of sophistry to mislead subscribers regarding the Fund and your Commission's intent.
- We recommend strongly that the Commission exercise its authority and require these BDUs to contribute 1.5% of their gross revenues without passing this cost along to their subscribers. To date, the BDUs have passed on their LPIF obligations to their customers, so that the subscribers, rather than the cable and satellite companies, have contributed to the Fund.
- Notwithstanding their failure to contribute along the lines of the Commission's expectations, Canada's largest television distributors have collectively received 42% of the Fund's payments to television stations they own in 2009/10. In the case of Bell Canada, its subsidiaries' payments to the Fund were less than its other subsidiaries' draw from the Fund.
- Friends recommends that you open the LPIF to Community television stations along the lines of CACTUS' recommendations and the design initially put forward by the Our Cultural Sovereignty report of the House of Commons Standing Committee on Canadian Heritage.
- Finally, Friends' advice to the Commission is to bend over backwards to defend and protect the position of smaller ownership groups in view of the undue influence of the largest players in the broadcasting system.
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For information: Jim
 Profit Before Interest and Taxes
 "Broadcasting Distribution Undertaking" (BDU) is 'CRTC-speak' for cable and satellite distributors of television signals in Canada.