Source : Globe & Mail

The Canadian Television Fund has accused two cable giants of flouting federal regulations by halting millions of dollars in payments to the production industry — and one of the companies immediately challenged the fund to take the dispute to Federal Court.

Shaw Communications Inc. and Vidéotron Ltée have launched a protest against the $250-million fund, pulling their monthly contributions and calling on Ottawa to conduct a review of how the $150-million contributed by industry each year is being spent by the production community.

The fund was created 12 years ago to assist Canadian TV productions, and has helped spawn domestic shows as Degrassi: The Next Generation, The Collector and Da Vinci's Inquest. However, the cable companies have attacked the fund, calling it a mismanaged "subsidy" that could be more effective if they could exercise control over its administration.

Canadian Television Fund (CTF) president Douglas Barrett fired back at Shaw and Vidéotron Wednesday, suggesting the companies are brazenly disregarding federal regulations by shelving the monthly payments, which are worth more than $6-million between the two firms.

The CTF has retained legal counsel and is concerned several projects could be shelved as early as this fall if the Canadian Radio-television and Telecommunications Commission doesn't step in to enforce the payments. Beyond that, it is willing to fight the matter in court, Mr. Barrett said.

"We are taking action to preserve the fund," he said, prompting a challenge from Montreal-based Vidéotron, which is a subsidiary of Quebecor Inc.

"If that's how they feel, then we'll see them in court," said Vidéotron spokesman Luc Lavoie. "We are not afraid."

The dispute would have to pass through several hoops before it could be challenged legally. Tensions have escalated since last month, when Shaw chief executive officer Jim Shaw sent a letter to the CTF notifying the fund it would no longer pay.

The Calgary-based company is the largest contributor to the CTF, at about $60-million a year, however Mr. Shaw has long been an opponent of the payments, saying he would like to have control over how funds are administered and suggesting the dollars are being wasted on "shows nobody watches."

Vidéotron and Shaw have also complained about the 37 per cent of the fund that is allocated for CBC productions. Mr. Lavoie called the CBC "a state broadcaster" that already receives $1-billion a year in federal funding and says it doesn't need money from private industry.

Shaw and Vidéotron both say they are willing to support Canadian productions, but they object to being forced to hand the money over to the CTF to spend.

Other cable and satellite companies have not yet taken a side on the matter, however rumours circulated in Ottawa Wednesday that another major player was looking to back Shaw and Vidéotron.

However, Mr. Barrett suggested the two cable companies are simply looking to exercise control over the funds for their own gain.

The CTF is already scrambling without the funds and has postponed its budgeting for the fall, which could delay the production of some new shows in Canada.

"These interests extend to all of the producers and production companies and programs that go on Canadian television, and all of the many thousands of Canadians that work on those programs," Mr. Barrett said. "So this isn't just us saying we want the money. There is a definite downstream impact . . . [on] the lives of lots of people."

However, the CTF may not be in a legal position to challenge the matter if a judge does not uphold a CRTC order that the funds should be paid on a monthly basis.

Federal regulations state the money must be paid at the end of August each year, and can be sent in a lump sum, however the regulator has issued a circular to the industry that payments should be doled out on a monthly basis to sustain the production industry.

"The regulation [to make annual payments] does have the force of law, that's clear. The circular is not a requirement, it is a strong suggestion. But it doesn't have the force of law," the CRTC's Denis Carmel said.

A spokesman for Heritage Minister Bev Oda said he wasn't sure if the government will intervene before then. The dispute is being watched closely in Ottawa.

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