Canada’s Shaw Communications Tells CRTC to Scrap Local TV Subsidy

TORONTO – Canada’s TV watchdog on Monday heard calls from major cable and phone giants to kill or modify a $100 million annual subsidy from cable and satellite TV subscribers for small market TV news operations.

The CRTC in 2008 introduced the Local Programming Improvement Fund (LPIF), and in 2009 bumped it up to 1.5 per cent 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.

So those now vertically-integrated cable and phone giants on Monday lined up to urge the CRTC to end or change the LPIF, which they argue is a tax on their subscribers.

“There’s been significant financial stability for the over-the-airs (conventional broadcasters). We think all of these conditions have created an environment where, in 2008 it was a reasonable response to the situation, but today it’s no longer required,” Jean Brazeau, senior VP of regulatory affairs, at Shaw Communications, told the regulator during a hearing in Gatineau, Quebec.

Shaw is the biggest contributor to the LPIF, which last year gave 80 local TV stations around $106 million in subsidies.

“We’ve got the fund. Since we have it, and there’s still so much uncertainty, let’s keep it going for another two years. And let’s make it better,” Mirko Bibic, head of regulatory affairs at BCE Inc., the domestic phone giant that acquired the CTV conventional TV network last year, urged.

Bibic added BCE would not object if the LPIF was scrapped.

The rural TV market fund pits over-the-air broadcasters, who use local news to drive advertising revenue, against major content carriers that consider the LPIF an unwanted tax.

BCE said it wanted the LPIF retained for another two years, until the media group learns whether the CRTC will eventually introduce first-time carriage fees for local TV station signals.

The CRTC introduced the LPIF after twice turning down bids by broadcasters to receive first-time retransmission fees from cable and satellite TV carriers for carriage of their local station signals.

The LPIF review also comes as spending on local programming by domestic broadcasters has stagnated and even declined, owing not least to fragmenting TV audiences and declining advertising revenues.

Reduced investment in homegrown shows has also come as domestic networks like CTV and Global Television continue to spend progressively more each year on U.S. networks series to drive audience and ad revenue gains.