By Ahmad Hathout
For the second time in as many weeks, the CRTC has increased the carriage rate for channels considered of exceptional importance.
Operated by not-for-profit TV5 Quebec Canada, TV5/Unis TV, which reflect the international Francophone and Canadian Francophone markets, respectively, will get an additional two cents for a carry rate of 30 cents per subscriber, per month. The rate will remain effective until the next licence renewal date in August.
The regulator justified its decision by noting TV5 has been running deficits since the 2022-2023 broadcast year and has since exhausted all of its financial reserves, thanks in part to a five-per-cent decline in subscriber revenues of the broadcasters, who pay the rate. TV5 said it was now at risk of running out of cash to pay its employees and suppliers and that the rate increase would allow it to reduce its deficit, but not enough to return to a balanced budget.
“According to available financial projections, a $0.02 increase in the monthly rate per subscriber would eliminate the projected deficit or, at the very least, significantly reduce it,” the CRTC said.
TV5 Quebec said in a press release Wednesday that it welcomes the decision, which will “help the organization stabilize its short-term financial situation in a context of profound industry transformation, and allow it to continue supporting the creation, production, and broadcast of French-language content across the country, particularly within French linguistic minority communities.
“This decision comes at a pivotal moment for the organization and reaffirms the essential role it plays in achieving the objectives of the Canadian Broadcasting Policy as a service of exceptional importance,” the release said, adding that more sustainable measures are required to stabilize funding for such services of exceptional importance.
Major broadcasters, who have always argued that these rate increases negatively impact them as they struggle to stave off subscriber losses, argued for the CRTC to wait until it instituted a new regulatory framework that would sustain these channels of exceptional importance for the long term. They argued that TV5 got money through the federal budget, and any rate increase request should be reviewed at the next licence renewal date this summer.
In its reply, TV5 said the rate increase is “crucial for meeting its obligations, particularly in regard to CPE, which account for 55% of its revenue” and that it was at risk of cutting investments in Canadian programming.
“Although some interveners proposed budget cuts, TV5 stated that this approach would not be sufficient to cover its deficit,” the CRTC noted. “It also emphasized that its rates remain competitive compared to those of similar services, especially given its obligations regarding the production of and investment in Canadian programming.”
The rate hike comes months after the CRTC declared that it was putting three applications – TV5 Quebec Canada, Vues & Voix and CPAC – on hold until it resolves to institute the aforementioned regulatory framework that is supposed to maintain these programs of exceptional importance for the long-term, including establishing a fund dedicated to that end.
The decision also comes a week after the CRTC increased CPAC’s carry rate by three cents in the first major decision since the deferral ruling. The increased rate, however, could not spare two of CPAC’s programs, PrimeTime Politics and L’Essentiel, from being discontinued.
In both the CPAC and TV5 decisions, Atlantic and Nunavut Commissioner Ellen Desmond and Quebec Commissioner Stephanie Paquette argued that the reviews were premature, considering it comes before major regulatory reform and because the majority is effectively only addressing the difficulties of one side of the market.
“With respect for the majority opinion, we consider that, in the current context, the decision to approve the application has the effect of widening a gap that makes cable television less and less competitive with online broadcasting,” Wednesday’s joint dissenting opinion said. “By continuing in this way to add regulatory weight to a single pillar of our ecosystem without proposing any overall solutions, this decision undermines the ability of BDUs to renew their business model and accelerates their decline in the face of international giants who do not face the same constraints.”
The opinion is in contrast to the two commissioners in the majority camp — Adam Scott, vice chair of telecommunications, and Ontario Commissioner Bram Abramson — who have argued that decisions that impact programs of exceptional importance can and should be considered in parallel with regulatory reforms.
