Rogers says CRTC’s group-licensing framework too onerous, asks to pull out

Rogers Communications Inc. says it wants out of the CRTC’s group licensing framework, telling commissioners Thursday that it can’t meet the policy’s requirements for Canadian programming expenditures. “While we believe it is a forward-thinking policy that provides large broadcast groups with considerable flexibility and ensures stable funding to Canadian programming, the cost of entry for a group of our size and asset mix is simply too high,” Rogers Media president Keith Pelley told commissioners. “The benefits do not outweigh the costs. By requiring that we adhere to a 30 per cent group CPE you are not only asking us to increase our spending on Canadian programming at a much higher rate than our competitors, but you are also asking us to continue to incur further losses on Citytv over the licence term. We simply cannot agree to that.” Pelley asked the commission to establish individual expenditure requirements for its broadcasting services and a licence term of three years rather than five. Rogers presented its reply comments on the second-last day of the commission’s group-based licensing renewal hearings, which launched April 4 and are scheduled to end Friday. The company had also presented during the hearing’s first phase last week. The CRTC’s new group-based licensing policy gives broadcasters more flexibility and the ability to meet Canadian content obligations across a variety of broadcasting assets. The policy requires broadcasters to spend 30 per cent on Canadian programming and at least five per cent of revenues on “programs of national interest,” which cover Canadian documentaries, dramas, and awards shows. Bell Media, Shaw Media and Corus Entertainment Inc. are also part of the group-based licensing policy. Pelley said he believed the commission’s proposed 30 per cent expenditure requirement to be a “preliminary view,” but that it soon became clear the commission saw Rogers’ request for a 25 per cent group expenditure requirement as an exception. “It wasn’t our intention to come to this proceeding asking for a policy change,” he said. CRTC chair Konrad von Finckenstein seemed surprised by Rogers’ request to opt out of the group licensing policy. “I’d be lying if I said I wasn’t deeply disappointed in what you’ve presented,” von Finckenstein said. He read back Rogers’ Cancon expenditures from the last three years, which ranged from 29.7 to 32.8 per cent, and said he did not expect the 30 per cent level to be so unattainable as to force the company to pull out. “Opting out, basically leaving our group policy in shambles, is not the solution that I had ,” von Finckenstein said. Pelley responded that the historical Canadian programming expenditure figures are not a reasonable reflection of the company’s spending because it lost $100 million in those three years. For 2011, the company’s Canadian content spending is projected at 23 per cent, he said, and Rogers will still lose $15 million. “Are we playing chicken here?” von Finckenstein asked. “What happens if I say no?” Pelley responded that Rogers would have to look at its digital and publishing assets. “At 30 per cent CPE, we would have to evaluate how much we want to invest and how much attention we want to give to this particular core of the business,” Pelley said. Pelley requested a group Canadian programming expenditure of 25 per cent, with spending on programs of national interest between 2.5 and three per cent. The difference between that and the five per cent requirement would be spent on local programming, he said. Requiring a five per cent programs of national interest contribution would mean scaling back local coverage, which he said most Canadians would consider more valuable than the dramas, documentaries and awards shows that fit under the national interest definition. A similar sentiment arose earlier in the day when Bell Media presented its reply comments to the commission. Bell Media president Kevin Crull said he’s “frequently questioned the premise that PNI is more effective” at reflecting Canadian values than non-PNI programming. “It’s probably why we’re so emphatic that forcing above the five per cent is going to harm other areas of important Canadian content reflection,” he said. Commissioner Peter Menzies asked whether the programming of national interest requirement would lead to escalating demands for funding through the CRTC’s Local Programming Improvement Fund (LPIF). “If you had to spend more in PNI, that would put more pressure on things such as local news, which to me, it then follows that demand for LPIF would be greater,” he said. The CRTC created the LPIF in 2008 to support the production of local programming by conventional television stations in non-metropolitan markets. Bell’s senior vice-president of regulatory affairs, Mirko Bibic, said increased spending on programs of national interest could impact expenditures on news and local news, and that he would further probe the issue in an in-camera discussion. “That is the Rubik’s cube we have to play with,” he said. “There are puts and takes and there are many, many, many regulatory levers here, as I’m learning. And LPIF may be one of those that we have to pull.” Von Finckenstein also raised complaints from regional groups that there is not enough local representation or opportunity for the development of regional stories. “They have to seek you out, they have to come to Toronto, they have to invite you to come to the regions,” he said. The chair said he didn’t care what policy Bell established vis-a-vis the regions as long as the company produced something concrete. Bell has fought its own battle over spending on Canadian content and national interest programming, but there was no talk Thursday of abandoning the group licensing framework. Crull said meeting the requirements placed “a significant burden on a business that already has tremendous financial challenges.” “It would be a mistake to underestimate the financial challenge that a 30 per cent CPE rate poses for Bell Media,” Crull told commissioners. “While it is in fact 30 per cent of our revenues, it actually represents nearly half of our programming and production expenses, an unprofitable half to be sure.” Both presentations ended with in camera sessions closed to the public. The hearings' final day of presentations are scheduled Friday with appearances from Shaw and Corus. mburgess@thewirereport.ca

Rogers says CRTC’s group-licensing framework too onerous, asks to pull out

Broadcast | April 14, 2011

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