Source : National Post

OTTAWA - Canada's most profitable specialty TV channels, Teletoon and the History Channel, will be required to spend considerably more on Canadian content under terms released yesterday by the federal regulator.

The Canadian Radio-television and Telecommunications Commission said it has renewed the licences of 22 specialty channels but changed the way it calculates how much they must spend on Canadian content.

Channels with a historical profit margin before interest and taxes above 40% will be required to increase spending on Canadian programming by 7%. Those with a margin between 35% and 39% will have to pay 6% more, and those with a margin between 25% and 29% will have to spend 4% more, while those with a margin between 20% and 24% will have to spend 3% more. Those with historical margins of less than 20% will be able to stick to their current commitments.

Those commitments vary by channel, but are in the millions of dollars.

Eleven channels had margins exceeding 20%, but only Teletoon and History surpass 40%, the commission says.

Under chairman Charles Dalfen, the CRTC said it wanted to extract better Canadian programming out of the services but not necessarily more, so it focused on spending levels rather than the amount of airtime devoted to Canadian content. It also said it did not want to penalize channels for finding ways to be profitable.

The analog specialty channels, first licensed in 1996, had an average profit margin before interest and taxes of 19% in 2002, the commission said.

The CRTC said it adopted a graduated approach because it would be "counter-productive for the commission to increase the requirements imposed on profitable specialty licensees to a degree that would unduly penalize their entrepreneurial success.

"Under its approach, those specialty services whose Canadian programming expenditure requirements have been increased are still projected to achieve reasonable profit margins throughout the next licence term," it said in its decision.

The regulator also approved fee increases for Newsnet and The Score, but turned down a similar request from Sportsnet, a decision that could boost cable bills by 10 cents a month if cable and satellite distributors choose to pass on the full amount.

Newsnet received permission to ask for up to 6 cents more a month, instead of the 11 cents it sought. Newsnet told the CRTC it could not become profitable without an increase, partly because "advertising revenues and subscriber levels have reached a plateau and would grow only minimally in the new licence term."

The Score got an increase of 4 cents a month instead of the 30 cents it wanted. It said it has experienced $57-million in losses since startup.

Sportsnet got turned down in an attempt to increase its fee by 29 cents to achieve parity with rival TSN.

The other channels who have had their licences renewed until 2010 include The Comedy Network, Outdoor Life Network, MuchMoreMusic, Home and Garden Television, Prime and others.

© National Post