NIAGARA FALLS – APTN has asked the CRTC for a 10-cent increase in its monthly wholesale rate.
The request is part of its broadcasting license renewal application which the CRTC will hear today in Niagara Falls.
As a CRTC-mandated must-carry, the Aboriginal Peoples Television Network already gets 15 cents per TV subscriber per month from all cable and satellite TV customers and wants the Commission to increase it to $0.25.
It would mean an increase in annual baseline subscription revenue from about $18 million to approximately $30 million, given that there are a little over 10 million TV subscribers in Canada. APTN wants to use the money to buy and produce better programming, increase marketing and promotion and introduce east-west feeds.
The Canadian Cable Telecommunications Association has filed a brief opposing the rate increase, saying it is unjustified and that focusing more on ad sales would cover its needs.
“Forecasts filed by APTN indicate that, with the proposed rate increase, APTN would generate in total nearly $195 million in revenues from subscribers over the seven year licence period. While a large portion of the incremental revenues are proposed to be spent on new programming expenditures and promotional activities, APTN would also generate surplus funds over and above that amount. As a result, accumulated profit would total more than $20 million. The profits would be net of the total additional expenditures, as well as depreciation and interest charges,” says the CCTA letter.
“APTN is operated on a not-for-profit basis. Unlike other not-for-profit services that have recently sought increases to their wholesale rates, APTN has not proposed to establish any fund or identified any specific purpose or requirement for this additional money. Moreover, there appears to be no offsetting savings in interest expense that could be expected to accrue to APTN from using the surplus funds internally.
“As indicated in the table above, more than $15 million – or three-quarters – of the profits would be generated in the first three years of the seven year licence period. It is not until programming expenditures reach their peak of nearly $22 million in year seven – double that currently spent – that the full value of the rate increase is absorbed. This strongly suggests that the requested wholesale rate increase sought by APTN is not justified,” continues the CCTA submission.
In its application, APTN says the fee increase is justified and required, in order to meet its objectives. “APTN believes strongly that an increase in the maximum fee to be charged to distributors is essential for APTN to fulfill its mandate, and to meet the significant expectations of its many stakeholders,” says its supplementary brief to the CRTC.
“APTN proposes that the increase in revenue arising from the new maximum fee would be used for a number of different programming initiatives, all of which will contribute directly to the achievement of APTN’s mission, and none of which would be possible without the additional revenue to be obtained from a fee increase. The success of APTN has placed expectations on the network that currently far exceed its capacity to provide. Aboriginal citizens and non-Aboriginal Canadians want more programming that reflects the full spectrum of the Aboriginal reality across this vast country and APTN wants to fulfill those expectations.”
Ten cents more on the TV bill? Canadians just may object and side with the cable industry on this one.
– Greg O’Brien
