Canadian Local TV Subsidy to End, Cutting Monthly Subscriber Bills

The CRTC ruled industry consolidation and an ad industry recovery allows the local programming improvement fund to be phased out by August 2014.

TORONTO -- Canada’s broadcast watchdog has bowed to calls from major cable and phone giants to kill a $100 million annual TV subscriber subsidy for small market news operations.

The CRTC said the local programming improvement fund will be phased out by Aug. 31, 2014, leading to the monthly charge eventually disappearing from cable and satellite TV bills.

"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," CRTC vice-chairman Leonard Katz said in a statement Wednesday.

The CRTC in 2008 introduced the LPIF and in 2009 bumped it up to 1.5 percent of gross broadcast revenues for major cable and satellite TV operators in the face of a Canadian TV ad industry collapse.

But domestic conventional networks like Global Television and CTV have since been acquired by major Canadian cable and phone giants, and have seen their TV ad revenues recover.

Canadian media unions, whose members depend in part on the LPIF subsidy to remain in jobs at loss-making local TV stations, criticized the CRTC decision, which followed a public hearing earlier this year.

"Since the CRTC has ignored repeated requests to mandate local news on TV, this decision will lead to job losses and ongoing threats of TV station closures," Peter Murdoch, vp of media at the Communications, Energy and Paperworkers Union of Canada, said in the wake of the regulatory decision.

And the Canadian Media Guild, which represents workers at the CBC, said the CRTC decision will undermine Canada’s public broadcaster just as it faces concurrent cuts in its annual Parliamentary subsidy from the federal government.

The CRTC hinted Wednesday that some form of alternative funding for the CBC might be discussed and found at upcoming license renewal hearings in November 2012.

Domestic cable and satellite TV operators have until mid-September to show the CRTC how they will ensure Canadians eventually see lower monthly bills as the LPIF is phased out.