The CRTC has scrapped the Local Programming Improvement Fund, shutting down the fund financed by cable companies and utilized by TV stations for the purposes of supporting local programming. The plan is to phase out the fund by August of 2014.
The fund originated in 2008. Cable companies were required to pay into the fund with designs on protecting Canadian content during the economic downturn. As expected, the cable companies passed those charges on to consumers in the framework of higher rates and many Canadian consumers complained about the fund.
According to the CRTC, the fund is no longer needed because the media landscape has seen sufficient recovery and can survive without the money the fund provided. At the time of its inception, both Canwest and Global TV were in receivership and the CTV was bleeding millions.
“The fund was created to ensure television stations had the resources to meet Canadians’ needs for local programming,” chair of the CRTC’s hearing panel Leonard Katz said. “We are satisfied with the support it has provided during a difficult economic period.”
The decision to scrap the fund was not unanimous, with Elizabeth Duncan, the commissioner for the Atlantic region and Nunavut, stating that there was no evidence to support the fact that the needs of Canadians in smaller centres were being met. National commissioner Louise Poirie stated wishes that the fund be continued but the amounts lowered, while Quebec commissioner Suzanne Lamarre felt that the decision to eliminate the fund went against the commission’s obligations.
The elimination of the fund is expected to have an effect on the Canadian Broadcasting Corporation (CBC). They have already fallen victim to cuts, with $115 million taken out of its annual funding as per the latest federal budget. Under the fund, the CBC received about $40 million per year.
Conventional local television stations will have to revaluate their business priorities. Doing this in light of the fact that the industry has been stagnating for the last few years won’t be easy and we could be seeing the twilight years of local programming.
“There’s no doubt that local stations in small and medium-sized markets will receive significantly less revenue,” said Mirko Bibic, chief legal and regulatory officer with CTV owner Bell Media. “At a time when conventional television continues to be under tremendous financial pressure…this is obviously a major concern.”
With the cable companies “having” to pass the increases (around 1.5 percent) over to consumers due to financing the fund, the CRTC says that it expects the rates to drop. The regulator wants cable and satellite companies to prepare a report by September of 2012 proving that they’ve reduced customer bills as a result of the fund’s elimination.