OTTAWA-GATINEAU – The controversial Local Programming Improvement Fund (LPIF) will be phased out by August 31, 2014, the CRTC announced Wednesday.
Citing the advertising market’s recovery and the completion of the digital transition, both of which have helped to improve the financial situation of the country’s local television broadcasters, according to the Commission, the Fund’s contribution rate will be reduced from 1.5% to 1% for the 2012-2013 broadcast year, and to 0.5 % for the 2013-2014 broadcast year before being discontinued entirely effective September 1, 2014.
“While the implementation of the LPIF was appropriate to address the issues facing local stations at the time at which the LPIF was introduced, the Commission is of the view that reliance on LPIF funding is not sustainable in the long term in the context of the new broadcasting environment”, the decision reads. “The Commission considers that on a going forward basis, the broadcast industry as a whole will need to evolve and innovate in order to continue to provide high-quality local programming whether through the traditional types of programming offered by local stations or by other means."
The Commission established the Fund in 2008 to to support the creation of local television programming, particularly local news, in smaller markets after determining that broadcaster spending on local programming had stagnated or shrunk due to the fragmentation of television audiences and a decline in advertising revenues.
Since 2009, BDUs including cable and satellite companies have contributed 1.5% of their gross broadcasting revenues to the LPIF. Seventy eight TV stations received $100 million in funding in 2010, while 80 stations received $106 million the following year.
“The Fund was created to ensure television stations had the resources to meet Canadians’ needs for local programming”, said Leonard Katz, the CRTC’s vice-chairman of Telecommunications and chair of the LPIF’s hearing panel, in a statement. “We are satisfied with the support it has provided during a difficult economic period.”
The decision also directed BDUs to prepare a report due September 17 outlining the measures that they will take to ensure that customer’s bills will reflect these reductions. The reports must also provide evidence that consumers have either been notified, or that they were never required to pay the contribution.
Noting that many CBC/Radio-Canada television stations supported by the Fund are located in official-language minority communities, the CRTC also pledged to discuss the public broadcaster’s programming commitments at its licence renewal hearing which is scheduled for November 19, 2012.
The CRTC’s decision to discontinue the Fund was not unanimous, however.
Commissioner Elizabeth Duncan called the decision “premature”, noting the lack of evidence proving that the needs of Canadians living in non-metropolitan markets have been adequately addressed, and that economic conditions in those markets have improved substantially.
In a lengthy dissenting opinion, Commissioner Suzanne Lamarre broke out the more than 1,300 interventions received by the CRTC prior to the LPIF’s public hearing, and said that the decision was made “without regard for the Commission’s obligations under the Official Languages Act or the objectives of the broadcasting policy for Canada”.
Commissioner Louise Poirier also disagreed with the decision, saying that she would have preferred to maintain the LPIF for the next three years and reduce the BDU contribution rate from 1.5% to 1% effective January 1, 2013. She also said that she would have made changes to “better target recipients and to ensure that the funds be directed to local programming and that more transparency be required from recipient stations”.
The CRTC also issued a call for comments on the wording of amendments to the BDU regulations in light of this decision. Interventions are due by August 13, 2012.
