No decision on carriage fees in heritage committee's TV report

After hosting a series of fiery hearings this spring, the House of Commons committee on Canadian Heritage released on Friday its report on the state of local television, but left out any recommendations on the contentious issue of fee for carriage.

Private broadcaster CTV was unhappy the carriage issue was not addressed while Rogers said the report was an important reference point.

The standing committee, comprising MPs from all federal parties, released 18 recommendations after hearing testimony from 45 different groups in March, April and May about the issues and challenges facing Canada's TV industry, ailing from the increasingly fractured television landscape as well as from a dramatic drop in advertising revenue amid the current recession.

The issue of carriage fees — in which conventional broadcasters would be remunerated for their over-the-air signals now picked up for free by cable and satellite companies — was a crucial point of contention during the committee's hearings as well as those before the CRTC. But with no recommendations addressing the issue, the fight falls back in the lap of the broadcast regulator, which has already rejected carriage fees several times in the past few years.

The main report fails to recognize the carriage fee issue and other problems, says a dissenting opinion from the heritage committee's Conservative members, who "disagree strongly with some of the principal recommendations or lack thereof."

In their dissenting report, the Conservatives expressed their "most fervent and rigorous opposition to any potential fee for carriage system, either negotiated or imposed, that would have a detrimental effect on the consumer."

They also called for the removal of the current regulations against pharmaceutical advertising and do not support either a cap on broadcasters' foreign TV spending nor permitting the CRTC to issue fines against broadcasters and distributors.

Report outlines 18 recommendations

One of the report's major proposals — and something Canadian Radio-television and Telecommunications Commission chair Konrad von Fickenstein has himself suggested — is for cable and satellite companies to boost the money they put into the Local Programming Improvement Fund (introduced in October 2008) from the current one per cent of revenues to 2.5 per cent.

Equivalent to approximately $150 million, that increased fund should then be used exclusively to create "new, original local programming in small- and medium-sized markets," and the CRTC should enforce this, the report proposes.

It adds the recommendation that public broadcaster CBC/Radio-Canada and its affliates receive nearly half of this fund, with the remainder dedicated to broadcasters in small- and medium-sized markets.

The all-party committee also consuls the government to assist broadcasters and the cable and satellite companies in easing the the upcoming transition of Canada from analog to digital TV (the CRTC-set deadline is 2011). In the U.S., for instance, the federal government ran massive and lengthy public awareness campaign and offered a discount to over-the-air TV consumers before their switchover this month so they could buy digital set-top conversion boxes.

The report's other recommendations include:

• Stable, multi-year, and predictable financing for CBC/Radio-Canada, but for the government to consider reducing the public broadcaster's reliance on commercial advertising.
• For the CRTC to address the growing discrepancy between foreign and Canadian program spending.
• For the government to examine changes that would allow the CRTC to impose fines on broadcasters or broadcasting distribution undertakings (cable and satellite companies) who do not comply with their licence agreements.
• For the CRTC to add the number of hours broadcasters air original local news and local non-news content in its annual monitoring report statistics.
• For the CRTC to consider the concentration of media ownership when considering the licence renewals of private conventional TV broadcasters.
• For the government to eliminate the tariff known as Part II licence fee.

The report concludes with committee members requesting that the government table an official response.

Industry stakeholders respond

Comment from the industry flooded in quickly Friday afternoon following the release of the report.

"While we find many of the recommendations constructive, we are deeply disappointed that the Conservative government members of the committee choose to protect the record profits of cable companies over the interests of consumers and their local television stations," read a statement from private broadcaster CTV, which had in recent weeks hosted a rally on Parliament Hill and ran a major ad campaign urging support of carriage fees and warning of threats to local TV.

Rogers Communications vice-chair Phil Lind, however, noted that a proposal about carriage fees was missing from the main report and emphasized instead the dissenting opinion from the Conservative MPs.

"The number one issue from our perspective was the proposal to tax consumers put forward by the broadcasters. Despite a non-stop lobby effort by CTV to influence federal politicians, the report did not endorse the fee for carriage concept," Lind said.

"The heritage committee report should serve as an important reference point for the upcoming CRTC review of broadcast renewal licences," he added.

Performer's union ACTRA, a vocal representative of the creative community, hailed the committee's MPs for offering "balanced and thoughtful" counsel that supports increasing funds for local programming and the CBC, highlighting the importance of protecting Canadian content and curtailing broacasters' foreign TV spending.

"This report puts forward some positive ideas that we believe will help strengthen our broadcasting system as a whole," said Stephen Waddell, ACTRA's national executive director.

"I'd hate to see this important work go to waste. Too often these reports sit on a shelf and gather dust. We urge the government to give these recommendations serious consideration and act on them immediately."