Dispute Erupts over the Canadian Television Fund (CTF)

CCA Bul­letin 03/07

Jan­u­ary 30, 2007

Just the Facts

Some of Canada’s largest cable firms have decided that they will no longer be con­trib­u­tors to the Cana­dian Tele­vi­sion Fund (CTF). In a series of state­ments from Shaw Com­mu­ni­ca­tions and Videotron, these cable com­pa­nies have said that they can no longer jus­tify the con­tri­bu­tions that they make to the fund while the CBC claims a big por­tion of it, as well as over one bil­lion dol­lars in pub­lic funds through Par­lia­men­tary appropriation.

The CRTC‘s reg­u­la­tions require the cable com­pa­nies to con­tribute 5% of their prof­its into the CTF annu­ally. The CRTC is expected to take a tough line on the with­hold­ing of cable con­tri­bu­tions to the Cana­dian Tele­vi­sion Fund. The CBC has issued a state­ment that while 37% of the fund is reserved for inde­pen­dent pro­duc­tions for CBC and SRC, the money goes to the pro­duc­ers and not directly to the pub­lic broadcaster.

How­ever, in 2005, the Audi­tor Gen­eral of Canada Sheila Fraser crit­i­cized the Cana­dian Tele­vi­sion Fund on a vari­ety of gov­er­nance issues and the lack of clear goals. The dis­sent­ing cable com­pa­nies have seized upon these com­ments and Jim Shaw of Shaw Com­mu­ni­ca­tions has indi­cated he will with­hold fur­ther con­tri­bu­tions until the Fund pro­vides a “state­ment of account­abil­ity”, list­ing what pro­duc­tions it has funded, as well as the rat­ings and rev­enues each pro­duc­tion has generated.

The Min­is­ter of Cana­dian Her­itage, the Hon. Bev Oda, has sum­moned the recal­ci­trant cable com­pa­nies to Ottawa for a meet­ing on Tues­day, Jan­u­ary 30, 2007 to try and bring them back into the fold. The Min­is­ter also con­firmed that the Gov­ern­ment would pro­vide $ 100 mil­lion to the Fund in each of the next two years. This wel­come announce­ment is inter­preted to be a vote of con­fi­dence by the Gov­ern­ment regard­ing the Cana­dian Tele­vi­sion Fund.

The move by cable com­pa­nies jeop­ar­dizes the capac­ity of the CTF to pro­vide much needed fund­ing for the pro­duc­tion of Cana­dian con­tent in the broad­cast­ing sys­tem. The cable com­pa­nies have indi­cated that they would be pre­pared to increase their con­tri­bu­tions to the CTF if the rules of the game were amended to their taste and sense of fairness.

The Fund is an impor­tant sup­port pro­gram pro­vid­ing pro­fes­sional oppor­tu­ni­ties for Cana­dian actors, direc­tors, com­posers and writ­ers. The con­fi­dence of the fed­eral gov­ern­ment in the Fund is a wel­come devel­op­ment and the CCA will keep its mem­bers and sup­port­ers posted on fur­ther devel­op­ments via our bulletins.

Tell Me More…

The Depart­ment of Cana­dian Her­itage has pro­vided some use­ful back­ground notes on the Cana­dian Tele­vi­sion Fund. The fol­low­ing para­graphs have been excerpted from the notes.

The Cana­dian Tele­vi­sion Fund is a private-public part­ner­ship. It was cre­ated in 1996 by the Gov­ern­ment of Canada and the Cana­dian cable industry.

The Fund’s main objec­tive is to sup­port the pro­duc­tion of Cana­dian tele­vi­sion pro­grams that reach audi­ences in both offi­cial lan­guages, as well as Abo­rig­i­nal lan­guages, dur­ing peak view­ing hours (7p.m. – 11 p.m.) The Fund sup­ports the fol­low­ing gen­res of tele­vi­sion programs:

•  chil­dren and youth

•  drama

•  doc­u­men­taries

•  vari­ety

•  the per­form­ing arts.

For 2006-07, rev­enues from the Fund come from two sources, the Gov­ern­ment of Canada con­tributes $ 120.4 mil­lion and the Cana­dian cable and satel­lite com­pa­nies pro­vide an amount of $ 145 million.

For the Cana­dian Broad­cast­ing Cor­po­ra­tion (CBC), given its unique man­date as the pub­lic broad­caster and the CTF’s move to reward audi­ence suc­cess, it was decided that the CBC trig­gered pro­duc­tions would have a guar­an­teed enve­lope from the CTF. This rep­re­sents 37% of the Fund’s total con­tri­bu­tions. Most of this fund­ing goes towards drama pro­duc­tions.

A New Chair for the Cana­dian Radio Tele­vi­sion and Telecom­mu­ni­ca­tions Com­mis­sion (CRTC)

In another devel­op­ment, the Gov­ern­ment of Canada has also announced the appoint­ment of a new Chair for the Cana­dian Radio Tele­vi­sion and Telecom­mu­ni­ca­tions Com­mis­sion. Kon­rad von Finck­en­stein has been given a five-year man­date as Chair­man of the reg­u­la­tory body.

Mr. von Finck­en­stein has enjoyed a long and var­ied career in Gov­ern­ment hold­ing a vari­ety of posi­tions from the Senior Coun­sel of the Trade Nego­ti­a­tions Office, Assis­tant Deputy Min­is­ter Free Trade Pol­icy and Oper­a­tions, Com­mis­sioner of Com­pe­ti­tion (the head of the Com­pe­ti­tion Bureau). In late 2002, he appeared before the Stand­ing Com­mit­tee on Cana­dian Her­itage, as it under­took its study on the state of the Cana­dian broad­cast­ing sys­tem. He told the Com­mit­tee that as Com­mis­sioner of Competition,

Our inter­ests [at the Bureau] in broad­cast­ing and telecom­mu­ni­ca­tions are strictly focused on eco­nomic com­pe­ti­tion in the key mar­kets. We rec­og­nize that the Gov­ern­ment is also inter­ested in pur­su­ing other objec­tives, includ­ing cul­tural and social goals.

The chal­lenge is to find approaches to these cul­tural and social goals which are effi­cient, effec­tive and per­mit eco­nomic competition.

He also said that the CRTC should let the Bureau assess the eco­nomic effects of merg­ers in broad­cast­ing, and restrict itself to deal­ing with merg­ers’ impact on “cul­tural val­ues”. Two huge trans­ac­tions – CTV’s acqui­si­tion of CHUM radio assets, and CanWest’s acqui­si­tion of Alliance Atlantis spe­cialty ser­vices – may be con­sid­ered by the CRTC this year.

While head of the Com­pe­ti­tion Bureau, Mr. von Finck­en­stein opposed a merger between Astral and Télémé­dia involv­ing radio sta­tions, argu­ing that the acqui­si­tion sub­stan­tially dimin­ished com­pe­ti­tion in adver­tis­ing in that province. Astral already owned 12 radio sta­tions in Que­bec, and wanted to buy 11 more radio sta­tions there from Télémé­dia: the CRTC approved the trans­ac­tion, in part because Astral’s increased size would allow it to improve pro­gram­ming on those sta­tions. After­wards, how­ever, the two com­pa­nies and the Bureau reached a dif­fer­ent agree­ment: Astral acquired fewer radio sta­tions and with­drew appli­ca­tions for sev­eral other new radio sta­tions, while the Bureau dropped its opposition.

So while the CTF dis­pute with the cable com­pa­nies will be an inter­est­ing first test of the new Chairman’s skills in this crit­i­cal posi­tion, those involved in Cana­dian broad­cast­ing will also be affected by Mr. von Finckenstein’s views when it comes to large own­er­ship trans­ac­tions in Canada’s $3.5 bil­lion radio and tele­vi­sion broad­cast­ing sector.