The Canadian Association of Broadcasters and Bell ExpressVu have inked an agreement to distribute 20 additional local private TV stations on the DTH service. The proposal, filed with the CRTC on Nov. 12, also calls for Bell ExpressVu to divert 2% of its gross annual revenues, currently about $12 million, from the Canadian Television Fund to an independently administered fund specifically for local and regional programming.

CAB president and CEO Glenn O’Farrell says local TV stations are under a lot of pressure from the proliferation of news, pay and specialty services, digital channels and other new services on the eligibility list. O’Farrell says the agreement follows the precedent set by the CRTC which allows cable companies to divert 2.4% of gross revenues to local cable community channels.

In the absence of a commercial distribution agreement, CRTC rules require Canadian satellite TV providers to delete programs which are also broadcast by local TV stations.

In some communities, often in Western Canada, DTH households make up half of all wired households, but subscribers cannot receive local newscasts.

‘Without this agreement the financial viability of the local and regional broadcast system will be in serious jeopardy,’ says Ken Ruptash, VP/GM, Midwest Broadcasting, Lloydminister, AB.

In a prepared statement, Bell ExpressVu president Tim McGee describes the deal as ‘a win-win agreement. We’re able to offer Canadians more programming choices and more programs with a local perspective.’

CAB has not cut a deal with DTH service Star Choice (Shaw Communications). ‘So in a nutshell we find ourselves with one DTH operator who has agreed and we have to submit that to the commission. Star Choice still has not accepted this proposal,’ says O’Farrell.

The deal calls for Bell ExpressVu to begin distribution of an additional 20 local TV stations, four have already been added on an ’emergency basis,’ and 16 more will be added in 2003.

$12 million for local stations

The new local and regional TV station compensation fund allocation will immediately reduce Bell ExpressVu’s contribution to the CTF, and under-represented priority programming, by 50%, or from 4% to 2% of gross revenues. Another 1% goes to the Bell Broadcast and New Media Fund.

In contrast, cable contributes about 2.6% to CTF and 2.4% to community cable. ‘What we are suggesting the deal does is create a form of parity between cable and DTH,’ says O’Farrell.

‘But [the $12 million] will only be lost for approximately 18 to 24 months if you look at the way DTH has grown’ and at current growth forecasts, he says.

‘I understand that for certain people who look at this and say, ‘Well, this is still [CTF] money that we are losing even if it’s only temporary.’ But to them I say the broadcasting system was built over years and years of trying to find a balance between competing objectives. And at this point in time in light of all the fabulous things the DTH policy has brought us in the way of richer services and a stronger system, the matter of local programming had to be addressed and we couldn’t find any better way to address it,’ says O’Farrell.

Allocations from a new local station compensation fund will be made by a committee composed of two reps from Bell and three from the broadcast side.

O’Farrell says the agreement was the subject of ‘long, arduous discussions with the CAB board.’

‘[The deal] is not ideal,’ he says, ‘but is within the scope of the art of the possible and we think the regulator should approve it for these reasons.’

O’Farrell points out DTH providers ExpressVu and Star Choice have contributed close to $70 million to the CTF over the past five years. Combined, the two services contributed $32 million to Canadian production funds in 2001, up from $2 million in 1998.

Bell ExpressVu says DTH is responsible for about $700 million in additional annual revenues for the Canadian broadcasting system. This includes $306 million in subscription and advertising revenues received by Canadian pay and specialty channels, of which an estimated additional $107 million was spent on Canadian programming as a result of DTH.

-www.cab-acr.ca