not help: Nordicity

If private broadcasters are allowed to reduce their investment in Canadian programming in exchange for helping financially sustain the cbc, the result could be less money in the system for making Canadian programs, according to an analysis of the NGL Nordicity Group report on alternative revenue-generating mechanisms for the cbc.

The analysis, written by David Ellis, president of Omnia Communications and commissioned by Canadian Heritage, says it’s unclear in the Nordicity report whether alternative funds would actually increase production at cbc or simply maintain the levels already established.

But if private broadcasters are given a reduction in the amount they are forced to spend on Canadian programming in return for levies going to the cbc, the net benefit to the system could be reduced since the cbc’s ability to make up for this loss of funding would not necessarily increase.

The costs associated with adding high-budget programming to the schedule are not addressed in the Nordicity report, says Ellis.

It’s too soon to comment on either the Nordicity report or Ellis’ analysis, says cbc president Anthony Manera. But with a commitment of 95% Canadian programming during primetime by 1997, Manera says the $20 million that now goes towards buying u.s. sitcoms will be used to develop more Canadian programming.

It’s unclear whether that $20 million would make up for the loss of investment capital from the private broadcasters, or if the increase in Canadian-content programming at the cbc would balance out the decrease awarded to the private broadcasters in exchange for their financial support. There may be less opportunity overall to sell Canadian programs.

The Nordicity report doesn’t suggest the amount of reduction private broadcasters could be entitled to, but it does stake out two possibilities for the structure of reductions:

For every 1% reduction, broadcasters could save $13 million; or alternatively, a ‘pass-through’ of $100 million tax on overall ad revenues, and 30% of what’s left to be spent on Canadian programming expenditures. For example, using 1992 figures, private broadcasters spent 35% of total ad revenue on Canadian programming, about $467 million.

A pass-through would take $100 million off the top of the $1,341 million in total ad revenue and private broadcasters would spend 30% of the remaining $1,241 million on Canadian programming. That’s $372 million – $95 million less than broadcasters actually spent on Canadian programming in 1992.

There would be significant complications in cutting Canadian programming expenditures, says the Nordicity report. Cancon regulations would still have to be met and private broadcasters would still contribute to Canadian programming for market reasons, it says.

Plus, with the most expensive programs the first to be eliminated, independent producers and program suppliers could be adversely affected.

Commercial advertising accounted for 23% of the cbc’s total income, or $305 million in revenue for 1992/93. The Nordicity report suggests limiting cbc’s tv advertising revenue to eight minutes an hour, but doesn’t address the disruption of the distribution of cbc’s signal by its commercial affiliates this would entail, says Ellis’ report.

The cbc should be looking at a user-pay service, repackaging and selling some services separately, and entering the multimedia market, as potential new sources of funding, argues Ellis.

The Nordicity report suggests imposing levies on cable services, telcos, private broadcasters, and specialty services, but established telecommunications services are not reliable sources of long-term revenue, he says.

The Nordicity report fails to accommodate the changing infrastructure of the Canadian electronic culture. Levies on these services cannot be targeted as stable sources of funding for the cbc since convergence and new media will impact their revenue base, he says.

In addition to bringing in revenue, user-pay services would give the people a say in the future of the public broadcaster. There’s no guarantee that the consumer would support the extra taxes likely to fall to them if broadcasting services are levied as suggested in the Nordicity report, says Ellis.

Revenue could also be derived from acting as an educational broadcaster, a cd-rom title developer, or an on-line computer network provider, his report suggests. AV