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FRIENDS presentation to the CRTC on Local Television (BN CRTC 2015-421)

FRIENDS presentation to the CRTC on Local Television (BN CRTC 2015-421)

January 26th, 2016

FRIENDS tells Canada's broadcast regulator that without prompt action from the CRTC, many local TV stations, particularly in small and medium markets, will likely fail.

M. le président, conseillers, merci d’avoir invite les AMIS1 a comparaître aujourd’hui!

Je vous présente Peter Lyman, associé principal chez Nordicity et Nik Nanos, président du conseil de Nanos Research, qui m’accompagne pour répondre à toute question qui pourrait survenir au sujet des rapports de recherche que nous vous avons soumis le 5 novembre.

On Thursday, Bob Cox, Publisher of the Winnipeg Free Press and Chair of the Canadian Newspapers Association, penned a comment on last week’s PostMedia cuts. Here’s a quote:

“The real crisis arising out of the massive media disruption of the past decade is communities are losing the journalists who tell people what’s really going on where they live…. Let’s… move the discussion away from the economic health of some newspaper companies to the democratic health of our communities and talk seriously about how we continue to get local news coverage.”

Our key messages today:

  • Canadians care about local TV – especially news.
  • Without prompt action from your Commission, many local stations, particularly in small and medium markets, will likely fail.
  • Local TV news is essential to the democratic health of our communities.
  • In an environment of scarce resources, priority should go to independent stations in small markets.

A key conclusion of the Nordicity–Miller study is that Canada’s local television system is at risk of major cutbacks and station closures. It projects that about half of Canada’s private small and medium-market stations could close by 2020. This would cause a permanent loss of 100 hours of local programming weekly and 910 jobs, unless you take action.

The weakening or disappearance of local TV services in the order of magnitude projected in the study will sharply reduce the availability and quality of local programming, especially local journalism – and this effect will be felt most strongly where local programming and journalism are already in the shortest supply – single-station markets.2

By contrast, large markets are often served by three or more local private stations – as well as CBC/SRC. The loss of a local station in a large market would be “sad” – a word that has recently entered the CRTC lexicon – but not fatal.

The study also describes how United States local broadcasters do not face a similar fate because, over the years, U.S. policy-makers have introduced numerous measures to strengthen local TV – measures that your Commission and the Government of Canada have failed to implement.3

Your Commission’s continuing assertion that “there is sufficient funding within the system to ensure the creation of locally relevant and reflective programming” flies in the face of the evidence, a form of denial that evokes the image of King Canute or an ostrich.

At its very best, your proposed solution of new money for local TV coming from the existing BDU 5% contributions is a stop-gap proposal that might delay small and medium-market station closures. We do not discount the value of an interim emergency move, but much more is needed.

Nordicity–Miller confirms that a reallocation of 5% BDU contributions alone cannot plausibly redress revenue losses for all local TV in Canada. There is simply not enough money on the table to solve the problem. The study indicates that a 1.25% BDU contribution would fill the revenue gap otherwise projected for small and medium-market stations by 2020. Extending this to all stations would require in excess of 3.5% of BDU contributions.

We have proposed a number of key considerations:

  • The Commission must maintain and secure a future for local TV and local news. Multiple local station closures would be unacceptable to Canadians and a damning legacy for your tenure at the Commission’s helm.
  • ‘Rob-Peter-to-pay-Paul’ support coming from existing BDU contributions is also unacceptable.
  • There is a market reality that obligations on BDUs, or rather their customers, cannot be so onerous as to place BDUs at a material competitive disadvantage vis-à-vis competing and currently non-contributing over-the-top (OTT ) television players.

A reasonable assessment of priority and sustainability suggests that what ought to emerge from this proceeding is:

  • new support for small and medium-market stations, regardless of ownership, especially when a station is the only service in a given market, and
  • relatively stronger support for independent small and medium-market stations in comparison to their vertically-integrated counterparts.

If, notwithstanding advice to the contrary, you end up determining that additional local TV funding must be confined to existing BDU contributions, large-market stations should be a lower priority for funding.

The Commission and the new government should collaborate to create a policy environment that recognizes the needs and vital importance of local TV.

An example would be to recognize the huge one-time hit for local TV stations of channel relocation costs as a result of the former government’s decisions on re-purposing the 600 MHz band. Although those decisions derive from – and align with – U.S.-driven spectrum re-purposing, the Americans have undertaken to reinvest a portion of the windfall to reimburse local TV broadcasters’ capital costs, while the former Canadian government ignored our broadcasters’ needs.

We note that this is the kind of ‘shovel-ready’ infrastructure investment that can kick-start the economy. The Prime Minister has said that his top priority is to “grow the economy”. In your decision, you should draw this opportunity to the government’s attention.

Sixteen months ago at the Let’s Talk TV hearing we told you:

On local television, you must act. Our democracy – a well-informed citizenry that is engaged in public life – relies on it. Local stations will close if you don’t, and we don’t have to tell you the political consequences of that.

Although we have seen significant cuts, ‘dumb luck’ is most likely the reason that we haven’t yet had a station closure. If you don’t have preventive measures in place by the autumn of 2016, stations will close. Canadians, and the new government, will know whom to blame!

Bell Canada, owners of the CTV and CTV2 networks with more than 30 local stations, advised you at the Let’s Talk TV hearings that it might close as many as 20 of its local stations by September 2017.

And the Coalition of Small Market Independent Television Stations (SMITS), wrote you almost a year ago that station closures are imminent. In May, you brushed them off.4

If this hearing’s considerations are confined to a redirection of BDU contributions, and not an increase, any solution will be a band-aid – at best a temporary fix.

We are cautiously optimistic that the new government may reverse some of the directions, formal and informal, set forth by the former government. We also believe that the government has the capacity, and possibly the will, to introduce new supports for the system, be they promised funds for public broadcasting, new mandated contributions from OTT players or ISPs, changes to advertising expense deductibility, and some form of retransmission consent.

You need not ignore policy priorities of the government of the day, just because you are a quasi-judicial body. Over the past few years, you have demonstrated that you are sensitive to this need.

C’est valuable dans les deux sens. Si, à partir de la prevue qui vous aura été présentée lors de ces audiences, vous êtes d’accord avec nous et d’autres qu’il faudra que le gouvernement assume le leadership pour assurer un avenir durable à long terme pour la télé locale – alors, dîtes-le. Faites le savoir au gouvernement. Mettez vos conseils dans votre decision.

We would be happy to respond to any questions.

– 30 –

For information: Jim Thompson 613-447-9592

1 FRIENDS of Canadian Broadcasting is an independent watchdog for Canadian programs on radio, television and online, supported by 335,000 Canadians. FRIENDS is not affiliated with any broadcaster or political party.

2 If there is another station, it is likely owned by the same independent owner.

3 FRIENDS’ November 5th submission, paragraph 36.


Related Documents:

Feb 11, 2016 — Policy Brief — Joint Response to Undertakings (BN CRTC 2015-421) FRIENDS and Unifor respond to a number of undertakings with respect to two research studies filed on the CRTC's review of Local and Community TV.

Nov 5, 2015 — Policy Brief — Broadcasting Notice of Consultation CRTC 2015-421 - Review of Local and Community TV FRIENDS says that the CRTC and the new government should collaborate to create a policy environment that recognizes the needs and vital importance of local TV.

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