GATINEAU – There were some pretty big surprises as Canada’s large broadcast groups took the stand one last time during the CRTC’s group licensing proceeding in Gatineau last week.
While it should come as no shock that Bell Media maintained its position on symmetrical regulation of Canadian content spending requirements – 30% on Canadian production expenditure (CPE) and 5% programs of national interest (PNI) – Rogers Media shocked commissioners when it asked to be excluded from the group licensing regime.
For Bell, complying with the new group licensing approach is simple: all large broadcast groups should follow the same rules. But if the Commission decides to allow different rules such as a Cancon spending ramp up over the next licence term, then this should apply to all.
“If the Commission decides to rewrite its policy by adopting a ramp up schedule to reach these rates, then all large ownership groups must be treated the same,” Kevin Crull, president of Bell Media, said during the company’s final reply. “Stated simply, the policy either applies to an ownership group or it does not. If it applies, then it must apply on a consistent basis and special treatment should not be given to some ownership groups.”
Rogers took this aspect to heart, telling the Commission that it couldn’t sacrifice getting its conventional Citytv stations back to profitability just to comply with a group licensing regime that has Canadian content spending requirements that it believes are too onerous.
“While we believe it is a forward thinking policy that provides large broadcast groups with considerable flexibility and ensures stable funding to Canadian programming, the cost of entry for a group of our size and asset mix is simply too high. The benefits do not outweigh the costs,” Keith Pelley, president of Rogers Media explained. “
Acknowledging that its proposal may not sit well with the CRTC, the company committed to doing what it could for Cancon spending and said it would agree to a three-year licence renewal rather than five. Rogers Media noted that it would spend $146 million more on local programming over three years, a 42% increase from 2010 levels. With respect to PNI spending, the firm committed to 2.5% in years one and two of the licence and a 3% PNI spend in the third year.
CRTC chair Konrad von Finckenstein couldn’t hide his displeasure with Rogers Media’s request.
“I would be lying if I didn’t say I was deeply disappointed in what you presented. I thought we had a good discussion last time in underlining your problems,” he said to open his questions. “But opting out and basically, leaving our group policy in shambles was not the solution that I had required.”
Von Finckenstein also took Shaw Media to task over its proposal for a 5% PNI when its historical spending is around 6.3%. Noting that Corus Entertainment Inc. had sharpened their pencil, he had expected Shaw Media to do the same.
“The whole idea of this whole exercise was of course to see to which extent on which we can ramp this amount up over the licence term,” said the CRTC chair, noting that this type of approach wouldn’t be inappropriate. “You have until the end of this submission to rethink this point.”
Paul Robertson, group VP of broadcasting and president of Shaw Media, said the company felt that the 30% spend on Cancon was more important than a ramp up of PNI spending. The concern on the PNI front, he added, was “we don’t want put ourselves in a situation where we are picking projects to go into the PNI that are substandard to make a quota.”
In his opening remarks, Robertson said the Regulator must be leery of calls for increased regulation of the broadcasting sector such as imposing requirements on drama on conventional networks, feature film quotas, children’s programming and others when entities such as Netflix have the potential to destabilize the system.
“We are already seeing new unregulated entrants such as Netflix aggressively enter our marketplace and compete for our programming, our subscribers and our advertising dollars,” he said. “If new unregulated entrants can simply bypass the regulated system and take programming that actually helps subsidize our Canadian content, then we destabilize the regulatory bargain.”
Corus executives noted that it would adhere to the group licensing regime as long as the Commission granted condition of licence (CoL) changes. The company said that while it’s historical PNI spend was 9.2%, it requested 5% so that it could have more flexibility to respond to market conditions.
“In order to increase our PNI commitment, it is critical that we obtain the requested COL amendments. We simply cannot commit to a higher PNI rate without these since we will not have the right circumstances to succeed and grow our revenues and our audiences,” said Doug Murphy, executive VP and president of Corus Television.
Final written replies by the applicants are due into the Commission by May 6.
