GATINEAU – The CRTC’s Local Programming Improvement Fund (LPIF) is either a necessary source of cash desperately needed to keep some local TV stations on air, or a stimulus program circa 2008 that now should be terminated. However, if the Commission is tabulating submissions for and against (and it isn’t) LPIF the 1300-plus submissions so far on the CRTC web site land squarely on the side of maintaining it.
The fund was created almost three years ago (in the midst of the financial crisis and just prior to the destructive Stop-The-TV-Tax vs. Local-TV-Matters battle), before Shaw and Bell bought into broadcasting, to support the creation of local television programming, particularly local news, in smaller markets. At that time, it was determined broadcaster spending on local programming had stagnated or shrunk due to the fragmentation of television audiences and the decline in advertising revenues.
Since 2009, cable and satellite companies have been contributing 1.5% of their gross broadcasting revenues to the LPIF, and by the end of 2012, the fund will have distributed more than $300 million to more than 75 local stations across the country. Stations must broadcast local programming that includes news in order to be eligible for LPIF funding. The Commission had planned from the outset to review the fund in its third year of operation in order to decide whether it should be maintained, modified or cancelled. A hearing in April will do just that, but initial submissions were due in Wednesday.
Shaw Communications (which both pays into and gets money from LPIF) was unequivocal when it came to its vision of the future of the fund: There shouldn’t be one. “We support the termination of LPIF… by the start of the next broadcast year, and oppose any potential reallocation of LPIF contributions to other areas or causes,” says Shaw’s submission.
“This initiative was designed as a temporary subsidy for a specific purpose in 2008 – like so many other stimulus projects created in other industries and sectors at that time. Even if one concedes that LPIF was a necessary, short-term band-aid solution to the OTA conventional television crisis of 2008-2009, we are now dealing with a completely different set of case facts in 2012. Creating a viable space in the Canadian broadcasting economy requires investment, not dependence on an ever-increasing basket of cross-subsidies. Investment in network capacity and infrastructure (a BDU’s most important contribution to the system) and in local programming is the way forward. Long-term strength in local programming cannot be achieved by maintaining inefficient and largely ineffective transfer payments ad infinitum. Continuation of LPIF will only lead to greater reliance on subsidies.”
At the other end of the spectrum is CHCH. Purchased in 2009 by Channel Zero for about the cost of a couple of lattes from a then-reeling Canwest Global, the Hamilton station airs – by a country mile – the most local news programming in Canada, if not North America. It broadcasts 80 hours of local news per week – 10 times what it’s required by its license to do – and its ratings have jumped considerably (as well, hundreds of the submissions to the CRTC’s LPIF proceeding were made by viewers of CHCH, cheered on by the station itself which guided a write-in campaign).
“In an era of constant change and significant competition, the LPIF is the stable foundation, from which CHCH can operate, innovate and be successful in the most challenging of environments. With the continued support of LPIF in future broadcast years, CHCH will continue to grow and demonstrate that local programming can be the heart of a strong local station that is a dedicated part of its community,” reads the company’s submission.
“Subsidization in one form or another has been at the heart of the Canadian broadcasting system almost from its inception… Without the funding provided by the government on behalf of all Canadians we would not have the CBC, far less a CBC that is respected around the world. Without the funding provided by the Canadian Media Fund, Canada would not have a thriving production industry nor would we be able to produce the quality Canadian dramas that are now seen,” it continues. “How many community television channels might there be if the CRTC had not allowed cable companies to allocate 2% of their Canadian programming contribution towards their own community channels?
“Simply stated, the LPIF has helped sustain local programming for private broadcasters as well as the CBC. It has most certainly saved stations in some cases, and local programming in others while allowing the growth of local programming where stations like CHCH have endeavoured to so do.”
Back in the other direction, Rogers Communications stands with Shaw, against the continuation of LPIF. However, it advocates a phase-out over three years rather than an end to it this August. Rogers also strenuously objects to its competitors receiving funding on top of funding, for example, noting that the benefits packages stemming from a couple of large acquisitions already provide enough funding.
“As part of the benefits packages associated with the recent Bell and Shaw ownership transactions, both of their station groups received additional financial support, specifically for local programming. In Shaw’s case, $45 million was allocated for the production and exhibition of new morning newscasts on Shaw Media television stations in Regina, Saskatoon, Winnipeg, Toronto, Montreal and Halifax. Forty three percent of this amount – $9.5 million over seven years – is going to stations in markets that are also eligible to receive LPIF (Regina, Saskatoon, Winnipeg and Halifax),” notes the Rogers submission. “In Bell’s case, $28.8 million was allocated for enhanced local news on Bell Media television stations in the Winnipeg, Regina, Saskatoon, Edmonton, Calgary and Vancouver markets while $30 million was allocated to maintain local programming on the A-Channel stations (now CTV2),16 three of which receive LPIF funding.17 The financial support from the benefit payments for both Shaw Media and Bell Media has already begun to flow.
“The reality is that in some markets… there is now an abundance of additional support for local programming as a direct result of vertical integration that did not exist when the LPIF was created. For example, in Winnipeg, where we operate City TV in competition with Bell Media and Shaw Media stations, all three stations now offer a local morning news program and receive LPIF funding. However, both Bell Media and Shaw Media’s stations get additional funding as a benefit from these ownership transactions, calling into question any continued need for LPIF funding. In fact, the high level of local news funding available to our competitors in Winnipeg is threatening the viability of our news operations in that city.”
Bell Canada would like to see LPIF stay, with some modifications as the fund has allowed the company to keep the doors open at some smaller stations. “(LPIF) has successfully forestalled the closure of local TV stations in smaller markets, increased the amount of local programming available in some markets and improved the quality of local programming available in others,” reads the Bell submission. “However, even with LPIF funding, conventional television's financial prospects remain troubling. The prevailing market trends suggest that the situation could deteriorate in the near term. Given this challenging environment, the LPIF should continue at the current contribution rate of 1.5%, but with funds allocated based on local programming viewership and with funding to the CBC discontinued. With these changes, the LPIF can continue to serve its intended policy purpose.”
As shown in the CRTC’s document outlining where the LPIF funds go, CBC received the most from the fund in 2010-11 at $40.7 million.
While other independent broadcasters such as Pattison, Crossroads Television and Corus Entertainment also advocate keeping LPIF alive, some of the creative groups have other ideas for the cash.
For example, the Canadian Media Production Association and Directors Guild of Canada say they take no position on the fund’s existence but say that should the Commission decide to kill it, that the money should instead go to their members. “Should the Commission decide to discontinue the LPIF, BDUs should not have their contribution to the system reduced,” says the DGC submission.
Adds CMPA: “In our view, in the event that the LPIF is discontinued, the BDU’s 1.5% contribution should be reallocated to support the production, marketing and broadcast of Canadian feature films.”
The hearing is scheduled to begin April 16th in Gatineau.
