ELEVEN MONTHS AGO, the CRTC announced it would get rid of the Local Programming Improvement Fund, a line item applied to the monthly bill of every cable, satellite and telco TV subscriber in the country which was dreamed up and made part of the 2008 Broadcast Distribution Undertaking policy as a stop-gap measure to aid local, non-major-market broadcasters.
It has brought in just over $100 million a year for local private and CBC broadcasters since 2010 ($112 million in 2012), roughly split 60-40 in favour of the privates. Former Commission vice-chair telecom and acting chairman Len Katz was not a fan of the fund (privately, he viewed it as another tax on Canadians) and it is his stamp which is on LPIF’s elimination, announced mere weeks after the arrival of Jean-Pierre Blais into the chairman’s role. The fund is to be scaled back and eventually killed by August 31, 2014.
The announcement last July of LPIF’s demise was said by the CRTC to be a positive for Canadians since their subscription TV bills would be decreasing by roughly a dollar a month on average. Upon closer inspection – and viewed alongside the 2012 conventional broadcasting financials the Regulator released last month, one wonders if the deletion of the LPIF won’t kill what’s left of small- and mid-sized-town local broadcasting.
According to the Conventional Television Statistical and Financial Summaries published June 13th, removing the $64.4 million in LPIF money granted to private broadcasters in the 2012 broadcast year ended August 31st would drop conventional broadcasters’ revenue under the $2 billion mark and turn a slim $23 million PBIT line (itself an 85% drop from the 2011 broadcast year) into a loss.
The rationale behind eliminating and not extending LPIF was the broadcast TV’s bounce-back year of 2011, where PBIT was $152 million. However, the three years prior to that show negative PBIT of $117 million in 2009 and paltry returns of $7.8 million and $5.6 million in 2008 and 2010, respectively. It’s hard to rationalize how the CRTC thought that bounce in 2011 was going to be the norm moving forward and still eliminated LPIF based on that, especially since the 2010 figures reflect the inclusion of the then-new fund. (Broadcasters are telling us 2013 is a very tough slog on the ad sales front, too.)
“The Fund was created to ensure television stations had the resources to meet Canadians’ needs for local programming. We are satisfied with the support it has provided during a difficult economic period,” said Katz at the time. The press release continued: “Due to a recovery in the advertising sector and the successful transition to digital television, the financial situation of broadcasters has improved. The CRTC is confident that these stations will maintain the same quality of programming without support from the Fund.”
I am not confident about that one bit. Yes, most of our broadcast stations are owned by huge, very profitable vertically integrated entities which could certainly support struggling local TV stations, as many will and do point out. But those companies are profitable because they don’t tolerate divisions or other corporate efforts that constantly lose money, as their small broadcast outlets do. If something is a drag on resources any company, let alone big, profitable ones, will refuse to sustain them for long (as Rogers’ recent elimination of the short-lived CityNews Channel proves).
As a consumer, though, does this mean I want LPIF to remain? Like most, I hate having fees forced upon me. Then again, as a Hamiltonian who is a fan of local ’caster CHCH TV and its news, I want to see it prosper. My own cable bill shows $1.55 going into LPIF and if all of that went to CHCH, I’d be happy. I dare say that if given the choice, I would gladly pay at least that, whether the Commission forced me to or not and I don’t think I’m alone in that sentiment. (Full disclosure, CHCH owner Channel Zero is an advertising client of Cartt.ca, but I would say the same thing, even if they were not.)
This is just one of the myriad items the CRTC under chairman Blais will and must face when it opens its proceeding into television in the fall, as was recently announced. He has positioned himself as the “consumer chair” but, is chopping a buck or two off of Canadians’ cable bills more, or less, consumer-friendly than letting their local broadcaster go out of business? Then again, there are ways to let Canadians choose to pay for our local broadcaster. Heck, the Commission might find Canadians willing to crowd-fund their TV station.
Blais recently told the Banff World Media Fest in the same speech which he announced the review of television that he is far more concerned about “outcomes” and less about “rules”. The outcome for Canadians and their local TV stations without some kind of LPIF-like fund to support them may well be the extinction of such stations. While other outlets (such as cable community channels and various new media efforts) would pick up some of the slack, the Commission will have to decide if the disappearance of those stations is an outcome it believes Canadians are comfortable with.
If not, the Regulator may have to step up and regulate in some fashion so that these local stations can survive and thrive.
This is just a single item within the CRTC’s TV review, which looks to be an enormous – and enormously complex – undertaking. We at Cartt.ca are wondering what you think? Should LPIF remain? Can local TV be crowdfunded? What are the other specific issues you believe the Commission should be examining this fall? Let us know publicly in the box below or at editorial@cartt.ca. We’ll keep the e-mails confidential, if you wish.
