Source: Hamilton Spectator

The powers behind CHCH say the station isn’t in jeopardy, even though it will lose millions of dollars when a fund designed to help pay for local television programming in markets under a million people ends in two years.

Hamilton’s TV station is believed to offer more local news content — at 80 hours a week — than any station in North America, so it is among the hardest hit by the Canadian Radio-television and Telecommunications Commission’s decision to axe the $106-million Local Programming Improvement Fund (LPIF).

CHCH or the CRTC will not disclose how much the station is granted through the fund. But an industry insider says the Hamilton outlet was likely the biggest recipient among the independent stations that accounted for about a quarter of the fund.

The source pegs the CHCH share at somewhere between $5 million and $8 million.

The same insider estimates CHCH’s annual revenues at somewhere around $40 million, meaning the LPIF could account for between 12 to 20 per cent of total revenues.

The CRTC ruled last week that it would gradually reduce the fund, which collected the 1.5 per cent of broadcasters’ gross revenues that was then tacked onto consumers’ bills. The phase-out will begin in September and the fund will be eliminated by Aug. 31, 2014.

Since its inception, the LPIF gave more than $300 million to more than 80 stations that broadcast news and other local programming.

CHCH launched a public campaign in February aimed at urging the CRTC to preserve the fund in which hundreds of viewers took part. Cal Millar, president of CHCH owner Channel Zero, declined a request for an interview this week, saying the station is unsure of its next steps.

In a memo to staff provided to The Spectator, Millar said he was “disappointed” in the decision and that the “commission must feel that others were not making responsible use of the funding in the way that we have.”

He stressed that the station’s “survival is not in question; we have long since passed that point.” Millar said some “aggressive growth plans” may be re-evaluated.

Industry insiders say Channel Zero brass are reluctant to talk about the decision because of the sensitivities around getting on the wrong side of the broadcast regulator that grants licences.

A CHCH executive confirmed he’s been asked not to speak about the decision.

In his internal memo, Millar told staff: “This is not the time for sour grapes. The commission has made its decision, right or wrong. It is a time to look forward to numerous opportunities, such as radio, U.K. local television, our specialty channels in Canada and the United States and even growth in Canada.”

But in an interview with The Spectator in February, Millar acknowledged losing any of the LPIF could lead to layoffs, cuts to programming hours or higher advertising rates. An industry source says the CHCH operation employs about 100 people.

The LPIF was established in 2008 to help stations struggling with the transition to digital television in the midst of a growing recession. Many were struggling to stay afloat. The CRTC now says the transition is mostly complete and ad revenues have rebounded.

The regulator was under intense lobbying by the Shaw and Rogers cable companies to end the fund, which added less than a dollar to the bills of subscribers. Critics pointed out that the fund was often just shuffling money from the big distributors back to their own TV stations, and that the biggest winner was the taxpayer-funded CBC, which collected $41 million from the LPIF in 2011.

Bell, which owns CTV, said the LPIF is needed to make smaller market stations viable, but argued that contributions to CBC be eliminated.

Ian Morrison, spokesperson with Friends of Canadian Broadcasting, says the LPIF was flawed, but the CRTC should have rewritten the rules to truly help independents such as CHCH.

“They threw out the baby with the bath water. They caved in to the lobbying by big corporations that already have almost monopolies.”

Morrison fears the end of the LPIF will mean job layoffs and a cut to local news, sports and opinion coverage in Hamilton, which he says is the biggest city in Canada without a major broadcaster affiliate.

“Maybe it might not affect the quantity of local programming, but it will affect quality. Maybe you have fewer people in the sound booth or fewer people out gathering news. The only way you can really cut costs is to cut payroll.”

And Morrison says consumers are unlikely to see their bills decrease. The CRTC stopped regulating fees in 2002, and since then, Morrison says the cost of basic cable through Rogers has ballooned 68 per cent. That’s more than four times the cost of living increase of 15 per cent in that time.

“There is a real scandal here and people would be really angry if they understood what is going on.”

Channel Zero bought CHCH in 2009 from the floundering Canwest Global for what has been described as the cost of a couple of lattes. Since then, Channel Zero has introduced a mix of hefty local news and opinion content, along with classic movies and American dramas. CHCH broadcasts 10 times as much local programming as its licence requires.

© Hamilton Spectator