CRTC Puts BCE on the Hook for Tangible Benefits

by Jordan Richardson on March 22, 2011

The CRTC takes a lot of hits on the chin and often rightly so. The regulator for broadcasting and telecommunications in Canada reports to Parliament through the Ministry of Canadian Heritage. While the CRTC does create rules, those rules are exclusively designed to carry out the policies assigned to it by the government.

In issues of telecommunications, the CRTC reports somewhat informally to Industry Canada. It is Industry Canada, after all, that holds responsibility for the problematic and outdated Telecommunications Act.

In areas of broadcasting, the CRTC deals with and upholds certain Canadian content requirements. With BCE Inc.’s recent application for the takeover of CTVglobemedia, the Canadian content rules weren’t really an issue initially and BCE had no intentions of increasing funding for Canadian broadcasting programming. Under the current rules, in any transfer of ownership involving television services the new buyer must devote 10 percent of the value of the sale to “tangible benefits.” These “tangible benefits” include initiatives that benefit the Canadian broadcasting community.

BCE Inc. naturally scoffed at the initiatives and argued that it had already been assessed the “tangible benefits” fee when it first bought CTV back in 2000. Why pay again?

Many in the media, including production companies and industry experts, rightly raised their voices in opposition of BCE’s stance. The CRTC wound up agreeing and, on March 7, stated that they would only approve the acquisition of CTVglobemedia under the condition that BCE invest 10 percent of the $2.45 billion valuation in “tangible benefits.” These investments must be made over the next seven years as per the terms of the license to operate CTVglobemedia.

The funding is allocated as follows:

  • $221.8 million in television programming, including $100 million in programming of national interest, $28.8 million in enhanced local news in at least six markets, $60 million in satellite tech upgrades, and $30 million in A-channel stations
  • $17.5 million in radio
  • $3 million to the Canadian Broadcasting Participation Fund
  • $5.7 million to the Broadcasting Accessibility Fund

“Let’s remember that BCE started out with a proposal of zero dollars, based upon the fact they had already owned a fraction of CTV,” said Norm Bolen, president and CEO of the Canadian Media Production Association. ”We were pushing for a higher valuation of the transaction, and the commission agreed with us. If the commission had agreed with their original stance, it would have been a huge blow to the system and the independent production sector.”

With more money allocated to Canadian programming, this could mean bigger budgets for productions in the country. And that theoretically could help them compete for a larger piece of the pie against their American counterparts. One recent example of a television show to receive funding through “tangible benefits” was Corner Gas. The show ran for six seasons and was very popular.

There are those in the industry who believe that the CRTC has not gone far enough with its commitment to Canadian content, but unless there are policies to outline with rules the regulator’s hands are characteristically tied to the legal requirements. Add the reality of vertical integration to the mix and you’ve got a relatively ugly picture in Canada’s broadcasting and telecom sectors where the inmates run the asylum.

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Written by: Jordan Richardson. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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