Corus asks CRTC to defer CanCon obligations, citing volatility

Corus Entertainment Inc. is asking the CRTC if the broadcaster can spend less on the development and acquisition of Canadian content in the upcoming fiscal year, and make up the shortfall later on in its licence term. The inherent volatility of the media industry, the decline in advertising revenues, and the Competition Bureau: all have made it for difficult for the company to meet its CanCon obligations under the terms of its license, according to Corus’ filings with the regulator. Under the terms of its broadcasting license issued in 2017, Corus is mandated each year to spend some 30 per cent of the previous year’s gross revenues on Canadian programming. However, it can spend just 28.5 per cent of the previous year’s expenditures on Canadian programming if it makes up the difference the following year. In a Sept. 5 Part 1 application, posted on the regulator’s website Oct. 3, Corus asks the CRTC to let it spend just 27 per cent of its 2019 fiscal year revenue on Canadian content in fiscal year 2020, in exchange for spending more in later years of its licence term. In the last several years, Corus explains in its filing, the company “has experienced significant revenue swings … that will drive a dramatic, unanticipated spike in its CPE requirements over a short time frame.” “That spike would leave us in a more vulnerable financial position in the coming years. Specifically, its will lead to sub-optimal programming decisions, and impede progress on debt repayment,” the company wrote. The company also emphasized that it is not asking for its total spending over the whole licence term to be reduced, but only for the “additional timing flexibility” when managing the CPE obligations. In contributing to the financial difficulties it has faced in recent years, Corus cites the rise of new direct-to-consumer, Internet-based platforms; rising programming costs; debt obligations; and a Competition Bureau ruling that prevented the company from selling two French-language channels that Corus says would have netted it $200 million. In trying to offload the channels, Corus also let $2.3 million in Canadian Media Fund money go unspent, cash which reverted back to the CMF. In the September filing, Corus says it is back on the right track after putting in place a “conservative” operating plan, with revenue up three per cent in fiscal year 2019. However, Corus doesn’t expect that trend to last. “We do not expect our advertising revenues to remain on their current growth trajectory, particularly given that our advertising revenue growth has outpaced the industry, and advertising revenues have been declining steadily across the industry over the past five years,” the company wrote in its request to the CRTC. Corus has also asked the CRTC to expedite the request. CLARIFICATION: This story has been updated to more clearly reflect that the total CPE spending in the licence term would remain the same under Corus' proposal. CORRECTION: This story has been updated to reflect that Corus is looking to defer up to 3 per cent of its CPE spending, not 10 per cent.

Corus asks CRTC to defer CanCon obligations, citing volatility

Brief | October 3, 2019

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Corus asks CRTC to defer CanCon obligations, citing volatility

Brief | October 3, 2019

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