BCE company licensing cash projected to flood into Bell Fund within few years

The Bell Broadcast and New Media Fund (Bell Fund) doesn’t know how much funding it can expect from Bell Canada and sister company Bell ExpressVu LP as a result of new services the two companies hope to launch. This winter, the two companies filed applications with the CRTC for licences giving them the right to operate, respectively, new DSL-based broadcast distribution undertakings (BDU) and a video-on-demand (VOD) service. But before money can flow into Bell Fund coffers, the CRTC must first approve the two services, which are intended to be complementary. Their applications recently became public, and indicate that the Bell Fund will be the recipient of 1% of both operations’ revenues. But, revenue projections for the larger BDU operation have been kept confidential at Bell’s request (Broadcasting Notice of Public Hearing 2004-4). In its VOD application, however, ExpressVu notes that the number of subscribers to "related distribution services" - certainly all new Bell DSL television subscribers - is projected to grow from 35,000 subs in year one to 1.021 million by year seven. If the same approximate average revenue per user holds true for DSL-delivered TV as for cable television, about $45 per month, then revenues for the BDU operation could rise to around $46 million per month - $552 million per year - and would put roughly $5.52 million per year in the Bell Fund’s vault. On the VOD service, ExpressVu says that by year eight it will see revenues of $2.84 million per year, which would boost the Bell Fund by an additional $284,00 per year. Revenues from both, however, will take years to build to those levels. ExpressVu expects just a fraction of those numbers to sign on, and its contribution to the Bell Fund is expected to be only half what it could be in year seven by year four (see chart on page 7). The figures may be conservative, however. In its first quarter 2004 report, Manitoba Telecom Services Inc. (MTS) notes that quarterly revenues jumped to $1.4 million for its DSL-delivered television service - more than for all of 2003 combined. On March 31, 2004, the company had 14,271 customers signed up for the offering, compared to 721 a year earlier - a 1,979% leap. In its projections, ExpressVu expects to see only a 351% jump from year one to year two, from 35,000 to 123,000. If the satellite company’s numbers prove accurate, however, then the Bell Fund would see around $664,000 in Bell’s second year of DSL-TV operations. The cash, however much it ultimately ends up being, will come in handy. The fund is still reeling from a massive 40% cut to its budget, the result of a deal gone bad between the Canadian Association of Broadcasters and Bell ExpressVu (CNM Special Update, July 17/03). The two parties’ arrangement to solve a dispute over local programming by diverting some money from the Canadian Television Fund was changed by the regulator in the political maneuverings around funding for Canadian drama last summer. Instead of diverting cash from the CTF, 40% of the Bell Fund’s budget was hived off to a new local programming fund intended to help broadcasters deal with the effects of out-of-market programming, leaving the CTF intact. The cut meant that the Bell Fund - this country’s prime mechanism for funding convergent TV/interactive programming - saw the number of dollars it could dispense drop from around $7.5 million per year to $4.5 million this year. The fund’s executive director, Andra Sheffer, says the fallout is now becoming apparent. "We’ve just seen the impact this year, and it’s quite horrible," she tells Canadian NEW MEDIA. The fund is only approving about one out of every five or six applications that come to it, leaving dozens of worthy projects unfunded. Without a new infusion of cash, the fund has cut short a series of planned research projects that would help government and industry players better understand the sector. Sheffer says the cut has also upset the balance in how funding decisions are made. She says that with limited dollars, the fund has been seen to be sticking with tried-and-true producers with a proven history of creating successful convergent interactive/TV properties. Riskier projects are being left in the cold, Sheffer says, and the fund’s board of directors has raised a red flag on the issue. Yet, she tells CNM, there are still no proven business models for new media companies despite several years in operation for the fund, and she and others are now wondering whether Bell Fund dollars are being put to best use. "Are these companies becoming Bell Fund dependent, and therefore not seeking out the business models that they should be?" she asks. Some of the new cash infusion from the BCE Inc. companies will help the fund conduct a large-scale research project exploring how past Bell Fund winners have progressed toward creating viable business models, and how good a job the fund itself is doing evaluating the projects it helps. That research is expected to cost approximately what the fund paid for its first commissioned study, Catherine Warren’s BEYOND RATINGS - New Metrics for New Media (CNM, July 24/03). According to the fund’s recently released annual report, the organization paid $24,162 for the study. Mostly, however, any new dollars pumped in to the fund will go toward greater development and production funding, Sheffer says. Despite last year’s cut, however, the Bell Fund has managed to put some resources toward several new programs through industry and government partnerships. Sheffer guards the full roster of projects close to her chest, but tells CNM about two new initiatives that have fund officials excited. The first will be a five-day workshop, to be held in Toronto, to help new media players in other regions better understand the production business, and ultimately give them a boost competing with the interactive powerhouses in Hogtown. Dubbed Destination Digital, the program for a maximum of 20 people will be facilitated by Collideascope Digital Entertainment Inc. partner Steve Comeau. Participants will be given an intensive, hands-on workshop on new media production from conceptualization to marketing. Sheffer says the program came about at the behest of provincial new media funding agencies in Saskatchewan and Manitoba who see their clients struggling to stay competitive nationally. Both agencies are helping fund the participants’ costs, as well as the Nova Scotia government, though workshop attendees will likely have to pay some of the travel and accomodation price tag themselves. The course will be held from August 23 to 27, and word of it is slowly filtering through the industry. A second Bell Fund initiative is soon to be completed, this one to put online a series of the most important contracts and agreements that govern interactive companies’ relationships with other players. The annotated template toolkits will help guide interactive producers in asking the right questions when forging partnerships, Sheffer says. The templates were forged with the help of film and television lawyer Mary Barroll. Public hearings on the two BCE companies’ licence applications begin on August 9, and the deadline for interventions and comments to the CRTC is July 15. A spokesperson for the CAB tells CNM that the broadcaster lobby group is unlikely to seek any contribution from the new operations toward the local programming fund that created the original funding gap. That fund, he says, is derived solely from Bell ExpressVu’s BDU operations.

BCE company licensing cash projected to flood into Bell Fund within few years

Broadcast | June 25, 2004

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