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  • Howard Law

The CRTC’s chickens come home to roost on Internet TV and Local News

November 24, 2021

Rogers is going to screw us on sports content, spokespersons for cable distributor Telus warned CRTC Chair Ian Scott on Tuesday.

If the CRTC sanctions Rogers’ merger with Shaw and becomes the dominant Internet TV platform in English Canada it will be perfectly positioned to withhold must-watch sports events from the cable TV system altogether and broadcast them exclusively on its Internet platform Sportsnet Now, said Telus Regulatory VP Stephen Schmidt. The CRTC’s exemption of Internet broadcasting in the 1999 New Media Exemption Order allows Rogers to end-run the usual CRTC rules requiring broadcasters to sell programming to all cable distributors at a fair price.

If Schmidt turns out to be right, that’s not the only example of the regulatory chickens coming home to roost.

Take local TV news.

If the merger goes through Rogers will claw back $13 million in annual funding from Shaw’s Global News stations in a dozen communities across the country: Vancouver, Kelowna, Lethbridge, Calgary, Edmonton, Saskatoon, Regina, Winnipeg, Peterborough, Kingston, St.John and Halifax. The $13 million is about 10% of Global’s budget.

Rogers will reinvest that $13 million in Rogers’ chain of four City-TV stations in Vancouver, Edmonton, Calgary and Winnipeg.

The CRTC mandates a pool of roughly $400 million annually —5% of the revenue earned by regulated cable and satellite companies— to be divided among various content producers. The majority of it goes to the Canada Media Fund and similar “CanCon” funds to make Canadian film and documentaries. The rest goes to “local expression” which until 2016 was each cable company’s own hyperlocal community stations across the country.

Source: CRTC Financial Summary 2020

The CRTC’s 2016 funding tweak gave major networks like Rogers and Shaw the option to re-direct significant amounts of their “community” funding to their own “local” stations providing daily news coverage in the same geographical market. That tweak was the Commission’s acknowledgment that the local news industry had been operating in the red for four straight years (today, it’s nine years running).

Rogers and Shaw chose their local news stations over community programming and re-directed those dollars: Shaw’s boost to their declining revenues at Global News was $13 million. If the merger goes through, it’s gone, the equivalent of about 160 Global News salaries across Canada. It would be naive to think Global is just going to eat that $13 million. There will be less news coverage.

Yet there will be a $13 million windfall for Rogers’ City TV stations in four markets —Vancouver, Calgary, Edmonton, and Winnipeg— which will inherit the “community” funding from the former Shaw cable stations in those markets.

The City stations are a distant third or fourth in viewership in each of those markets: in Vancouver they are 1/20th the size of the market-leading Global News. Rogers has not given the Commission even a hint of its hiring or programming plans to close that gap in viewership.

Short a cool $13 million, Global News can still apply to the Independent Local News Fund (ILNF) to mitigate that loss.

The INLF was created by the CRTC in 2016, reallocating a sliver of the existing local expression funding called the Small Market Local Programming Fund, to help local news stations not owned by cable companies and therefore without access to the CRTC’s “community cable” funding. But that $20 million annual funding is already divided up among 20 independent stations such as Hamilton’s CHCH, Victoria’s CHEK, or Newfoundland TV.

The $20 million pie will be divided into thinner slices for all and certainly won’t replace Global’s $13 million.

This is a perverse result for local news, but once again it’s the regulatory chickens coming home to roost.

In 2008 the Commission took the decline of local news seriously and added a 1% revenue tithe (on top of the existing 5%) on cable companies that flowed to all small and mid market local stations in Canada, almost $100 million annually. During the financial crisis the levy increased to 1.5%. But in 2012 the Commission decided to terminate the funding citing a post-crisis surge in advertising revenues which did not in the end materialize.It wasn’t long afterwards that it became undeniable to the CRTC that the financial viability of local news was heading relentlessly downwards (See the graph at the top of this post). And so we got the aforementioned 2016 tweaks to local news funding which reallocated rather than increased the Canadian content funding expected from major cable companies.

Corus, which owns Global News along with a strong position in specialty TV channels, has a typical solution to the dilemma of local news: the CRTC should redivide the 5% Canadian content envelope yet again, this time taking money away from films and documentaries funded by the Canada Media Fund and giving it to the ILNF so there is enough money for all of the independent local stations once Global comes looking to replace its $13 million. The beefed up ILNF would have close to $50 million in the kitty.

Corus Submission to CRTC

Does this constant robbing of Peter to pay Paul seem as comical to you as it does to me?

There is a way through however. And that is Bill C-10.

The Liberals announced in November 23rd’s Throne Speech that they will re-introduce their overhaul of the Broadcasting Act. The raison d’être of C-10 is to get Netflix and the other American Internet TV providers to either make their share of Canadian content or make payments to the “5% fund” we use for Canadian content, including local news. Bigger pie, bigger slices.

C-10 is an opportunity to provide long term stable funding for local TV news and the government should seize it.


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