A DTH/CAB plan to redirect satellite money from the Canadian Television Fund to local TV stations is a subsidy scheme to underwrite the cost of local programming – basically licensed news, current affairs and sports obligations – according to producers.

Canada’s two main production associations, the CFTPA and APFTQ in Quebec, are adopting strong language to oppose any reduction in CTF resources as put forward in current licence amendment applications from DTH services Bell ExpressVu and Star Choice. A spokesperson for the CRTC says both ExpressVu and Star Choice have until Jan. 20 to reply. Both the CFTPA and APFTQ want the issue aired at a full public hearing.

The producers are responding to an ExpressVu/Canadian Association of Broadcasters proposal to divert half of ExpressVu’s contribtion to the CTF (or 2% of annual gross revenues) to a new station programming fund.

Star Choice is not backing the ExpressVu/CAB fund proposal, but it, too, proposes some CTF allocation be redirected to support local programming.

In their respective submissions to the CRTC, the CFTPA and APFTQ contend a 2% reduction in CTF contributions as proposed by ExpressVu/CAB would reduce Licence Fee Program funding by $16.3 million in fiscal 2003/04 and by more than $60 million in top-up contributions over the four-year term of the tentative negotiated agreements.

The CFTPA says the local TV station fund proposal is ‘an unconscionable request, without merit.’ APFTQ says ‘the [ExpressVu/CAB] proposition clearly constitutes, in our opinion, un marche de dupes…’

ExpressVu/CAB says future DTH contributions to the CTF will more than compensate for the immediate reduction, but the producers insist future CTF funding levels are far from guaranteed. There are persistent industry murmurings that the government is already considering some level of reduction.

‘We have no guarantee from this government that the CTF is going to be renewed. Absolutely none,’ Elizabeth McDonald, CFTPA president and CEO, says. ‘We could end up in a situation as of March 31, 2003 where the only [CTF] money would be that from the carriers, and we are taking it away.’

Claire Samson, APFTQ president and CEO, says, ‘If the CRTC agrees to [the DTH proposal], that puts Canadian Heritage in a very good position to reduce its own contribution to the fund. At the end of the day, it’s a very big issue because if Bell can do it then every cable operator can do it. That’s why I say it’s like opening a can of worms. Everybody will want to be an exception and we’ll never see the end of it.’

Samson says the DTH proposal is ‘self-serving because they want to take money from the [CTF] to redistribute it to the local stations, which are owned and operated by [the station groups].’

The APFTQ says the ExpressVu/CAB proposal would reduce the level of priority Canadian programming, in English and French, by as much as $350 million in production over the term of the agreement, and by as much as $490 million with lower Star Choice contributions factored in.

Double-dipping for casters

McDonald says the ExpressVu/CAB fund proposal ‘represents a double-jeopardy [for the CTF]…and a form of double-dipping for broadcasters. Broadcasters can access up to a third of the top-up fund [the LFP], so they could take some from that and some from this new [proposed local station] fund and start offloading their own local programming expenditures.’

One of the underlying issues is the claim that local private stations are facing a financial crisis.

McDonald says if there is a real crisis then a broad policy hearing should be convened, and full broadcaster financial disclosure and their ‘responsibility for the crisis’ should be on the agenda, ‘because they do have licences and those licences have value.’

‘We strongly believe that the CRTC should hold a public hearing and we shouldn’t decide this in some offside, sidebar panel. If there is a crisis in local programming then that needs to be dealt with in a full multistage, multi-impact public hearing, because part of the crisis is [the result] of consolidation. It’s not independent producers that are causing it,’ she says.

Revenue growth for the station groups has been flat since 1998, and CAB president and CEO Glenn O’Farrell has made it clear broadcasters want subscriber-fee compensation for conventional [over-the-air] networks. But McDonald says diverting CTF resources is not the appropriate response, ‘and to do it this way is quite bizarre.’

A reduction in DTH’s LFP contributions will also have an immediate impact on specialty TV services. ‘You should ask how the people at Alliance Atlantis feel about this,’ suggests McDonald.

The CFTPA objects to ExpressVu/CAB’s linking of ExpressVu’s regulated carriage or program deletion requirement to its obligation to contribute 5% of gross annual revenues to Canadian programming.

The CFTPA says it will ask the CRTC to separate the carriage and local and regional fund proposals, and consider the new fund at a later time.

(A summary of ExpressVu and Star Choice carriage arrangements are in the online version of this story.)

-www.crtc.gc.ca