CRTC grants Vision TV a 2-cent wholesale rate increase in contentious decision

Vision TV was awarded a 2-cent wholesale rate increase in a contentious CRTC decision last week, which caused three commissioners to write dissents (Broadcasting Decision 2003-23). The decision means that cable and satellite television subscribers will be paying more for the multi-faith specialty channel since it is part of basic packages. Vision TV president and CEO Bill Roberts estimates that between $1.5 million and $1.8 million in will be generated annually from the channels’ 7.2 million subscribers as a result of the decision. The CRTC pegs the amount at $9.3 million over five years, or a yearly average of $1.89 million. The rate increase comes into effect on March 1. The amount, however, is lower than the 3-cent wholesale rate increase from 8 cents to 11 cents that Vision TV requested as an amendment to its licence (Broadcasting Public Notice 2002-25) after being denied a 7-cent hike during its licence renewal process in 2001 (CCR, May 23/02). "I’m very pleased that the commission recognized the challenges that are faced by a public service broadcaster such as Vision. And I think it underlines a commission pursuit of ensuring that there is diversity and smaller voices and broadcasters with public service mandates in the system," Roberts tells Canadian Communications Reports. "In this country, we also recognize that an important component of the broadcasting system is not just entities that serve consumer interests, but also serve citizenship interests." But not all commissioners agreed. Commissioner Barbara Cram writes in her dissent, "Reflecting Canada’s rich diversity is a duty and obligation of all broadcasters…Extra money should not be given to reflect our diversity because this treats diversity as an option. If the fact that Vision is a smaller independent voice constitutes a valid reason, does this mean all other smaller ‘voices’ should be given an increase notwithstanding their profitability and the ‘larger voices’ should not, again notwithstanding their profitability?" she questions. In the majority decision, however, the CRTC does put some restrictions on the use of the money. The decision states that the additional subscriber revenue should not be used to support increases in operating expenses or a proposed reserve fund for the not-for-profit channel. The CRTC has also made it a condition of licence that Vision TV spend 25% of revenues generated by the rate increase on programming, over and above the 45% of gross revenues that Vision is currently mandated to spend on programming. "Thus, 70% of this increase will effectively be spent on programming," the commission notes in its decision, which stipulates the rest of the new money can be spent on capital expenditures that will serve to improve Vision TV’s programming performance. But Cram contends, "In my view, this decision creates a troubling precedent, creates greater regulatory uncertainty and is contrary to the trend of a market-driven consumer choice broadcasting system." Cram outlines Vision TV’s repeated requests for regulatory help in meeting its financial targets. The channel was initially licensed as a free multi-faith channel to be distributed on the basic service of broadcast distributors, with the applicant stating that no money would be required of subscribers. But in 1993, it was granted a wholesale rate of 8 cents after the channel requested a rate of 10 cents (Decision CRTC 1993-580). It was subsequently denied a 2-cent wholesale rate increase, but was allowed to up its advertising from 6 minutes to 12 minutes per hour. The commission rejected a request for a 7-cent increase during Vision TV’s licence renewal in 2001. "Four months after a decision based on a full public hearing is issued, a paper application is filed and handled as a paper application. The second decision essentially overturns the first…There is no objective basis for this increase nor does the majority purport there is," writes Cram. Two other commissioners, Stuart Langford and Cindy Grauer, were also so troubled by the majority decision that they wrote dissents. In his dissent, Langford notes, "…The majority has established a precedent the commission may eventually regret, one that is bound to tempt other programmers to rely on captive Canadian consumers rather than upon their own business acumen to solve future financial problems." Langford states that the record indicates that there is no "financial crisis" at Vision, and that the matter of a wholesale rate increase should have been considered during its next licence renewal hearing. Since Vision TV was given only a short-term renewal due to its non-compliance on Canadian content, its current licence expires in August 2004. Langford suggests that the majority has "unwittingly" rewarded Vision TV, when it should have reminded it of its basic broadcast principles. He notes that Vision TV was in non-compliance with regard to Canadian content, and that it aired a program that was declared unacceptable by the Canadian Broadcast Standards Council due to its anti-gay and lesbian message. Grauer picks up on this theme too. "This service has not demonstrated that it has always lived up to its commitments and conditions of licence. It has not demonstrated that it appreciates the need for accountability," she writes. "Until the opportunity presents itself for a throrough (sic) review of this licencee’s past performance and future goals, any increase in subscriber fees is inappropriate." But Roberts says that Vision has already been slapped on the wrists for its non-compliance issue with a short-term licence renewal, and that the homo-phobic error was an "aberrant" that was dealt with by the standards council. He adds that the commissioners are looking at the past, not the future. "First, the issues raised by the dissenting opinions are things of the past. Vision TV has been operating for the last couple of years in full compliance," he says. "The second thing is that by its very mandate, Vision deals with very controversial subject matters – faith and culture, multicultural matters. So I think it is very healthy for commissioners to have diverse opinions and to provide guidance and input to the broadcasting system about what they’re concerned about. But at the end of the day, Vision TV has addressed all of these issues in the dissenting opinions. And we are really dealing with issues of the future, not of the past." While the dissenting commissioners point out that Vision TV has always come back asking for more, Roberts doesn’t outright rule out more regulatory requests at its next licence renewal. "We need to digest where we are here," he says. "We came forward to the commission with a complete picture of what we wanted to be in the years to come in the context of a higher rate increase. We came back after having demonstrated exemplary performance, which was recognized in this 2 cents. We will see where that puts us in a go-forward basis. This year is Vision’s 15th anniversary so it’s a good opportunity for the executive management team and the board to discuss where we should be going in the next 15 years."

CRTC grants Vision TV a 2-cent wholesale rate increase in contentious decision

Broadcast | January 30, 2003

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