PIAC, Quebecor, music sector, all oppose Stingray financial relief proposal

Quebecor Inc., organizations supporting Canada music and radio sector, as well as the Public Interest Advocacy Centre (PIAC) are all opposing a proposal by a Montreal-based media and entertainment company to waive payments it owes to the sector in a series of interventions published Tuesday by the CRTC. The interventions are a response to a Part 1 application filed by Stingray Group Inc. with the commission on Aug. 31 2021 requesting the CRTC alter the amount of tangible benefits payable for the 2019-2020 and 2020-2021 broadcast years. Stingray’s Part 1 came a few days after the CRTC denied a request made by the Canadian Association of Broadcasters (CAB), which Stingray is a member of, to waive conditions of licence and regulations relating to broadcasters’ expenditures for the 2020 broadcast year, opting instead for an extended payment approach to benefit the entirety of the broadcasting industry. The CRTC also required contributions to FACTOR and Musicaction to be paid by the end of Aug. 2021. Had the commission approved CAB’s proposal, broadcasters would have avoided paying up to $138 million in Canadian programming expenditures (CPE), $13 million in programs of national interest (PNI) expenditures, and $13 million in Canadian content development (CCD) contributions, to the creative sector. “This application is being filed to address the serious financial impact the COVID-19 pandemic has had on Stingray specifically, something that was not addressed in the relief application by the CAB that led to the CRTC’s recent determination in broadcast decision,” Stingray wrote to the CRTC in its initial Part 1 application. Stingray proposed the CRTC waive its obligation relating to the FACTOR/Musicaction and Starmaker funds, which total more than $9 million for the two broadcast years combined; pay the 2020-2021 tangible benefits payments owed to the Community Radio Fund of Canada by Aug. 31, 2022; and delay the payment of all other tangible benefits payments for broadcast years 2019-2020 and 2020-2021 to 2021-2020 and 2022-2023. In a separate pair of interventions Fondation Musicaction, a non-profit for the development of Canadian Francophone music, and FACTOR (the Foundation Assisting Canadian Talent on Recordings) both told the CRTC that regular programming will be affected for both organizations despite Stingray’s assertions that the “tens of millions in government relief funding” would be enough to sustain the organizations for the next two years. “This argument suffers from false conclusions concerning both the amount of funding that FACTOR would require to replace Stingray’s contribution as well as FACTOR’s intended use and allocation of such funding,” FACTOR wrote in its intervention. FACTOR said it received $3 million in federal aid while Musicaction was allocated $2 million in relief funding. The organization also noted it could not use its $50 million trust, as suggested by Stingray, because its intended use is for when FACTOR’s mandate is withdrawn, at which point the fund will be accessed to fulfill existing program obligations as it winds down its operations. “Furthermore, Stingray’s contributions are also intended, in part, to support a diversity of high-quality cultural content that Stingray may ultimately draw upon as a broadcaster. For Stingray to abandon its financial obligations at this time will impoverish its own options in the coming years,” FACTOR noted in its submission. Musicaction said that it observed a 47 per cent drop in radio revenues related to tangible benefits (transfers of ownership) in 2021-2022 compared to 2020-2021, for a total decline of $885,519, due to the end of major mergers and acquisitions (such as BCE Inc. and Astral Media) in French-language broadcasting sector, according to a translation of its intervention. “Given current regulatory obligations and therefore known transactions, the decline will be continuous and will reach -$1.9 million in 2026-2027 . This anticipated decrease in tangible benefits has led the Foundation to exercise extremely rigorous management of its financial situation and to limit its commitments for all of its regular programs, and even to lower them in certain years,” it wrote to the CRTC. Radio Starmaker Fund noted to the CRTC that, as a matter of board policy, it does not intervene in applications filed with the CRTC because it would be “inappropriate as an independent entity to advocate for any particular positions,” but offered to provide any financial information the CRTC may need. The National Campus and Community Radio Association/l’Association nationale des radios étudiantes et communautaires (NCRA/ANREC), a not-for-profit association supporting 119 public-access campus and community broadcasters, also said it would not take a position on Stingray’s proposal to pay tangible benefits to some organizations and not others. It did note in its intervention that it does agree with Stingray’s observation that community radio has struggled during COVID-19 – due to a lack of volunteers, a decline in advertising and loss of fundraising opportunities – and asked that the CRTC ensure that the Community Radio Fund of Canada/Fonds canadien de la radio communautaire will continue to receive all of the tangible benefits and CCD funding that is owed to the campus and community radio sector. According to Stingray’s initial Part 1 application, the company saw a $78 million decline in revenues (excluding government subsidies) for its radio stations from the beginning of the pandemic to the date it filed its Part 1 application. The Public Interest Advocacy Centre (PIAC), in its Jan. 24 intervention, told the CRTC it should deny the request based on the fact that Stingray “has remained profitable throughout the pandemic.” It noted that the company is steadily recovering and has recently made significant acquisitions. PIAC added that the move would also set a bad precedent for future recipients of tangible benefits. “Tangible benefits payments are intended to ensure that the public interest is served and to yield measurable improvements to the Canadian broadcasting system in the wake of consolidations in the broadcasting industry. PIAC submits that the Commission should not enable businesses, especially profitable ones, to escape such obligations, in effect depriving the broadcasting system of owed benefits.” PIAC wrote. Quebecor Inc., on behalf of its subsidiaries Videotron and TVA Group Inc., also filed an intervention opposing the proposal. “Stingray's request and CAB's request share one thing in common: they both come against the backdrop of severe financial losses related to COVID-19. However, unlike the CAB's request, the regulatory relief Stingray is requesting can only benefit it, and cannot be applied to other broadcast industry players who have also been hard hit by COVID-19. . In other words, Stingray is asking the Commission for preferential treatment compared to all other broadcasters,” it wrote to the commission, according to a translation. The Writers Guild of Canada (WGC) , which represents approximately 2,500 professional screenwriters working in English-language film, television, radio, and digital media production in Canada, said it would not comment on the music-related proposals given that it does not fall within its expertise. The organization did say, however, that the CRTC should not re-value transactions retroactively simply because Stingray’s market bet did not pay off. “Tangible benefits are engaged when independent actors—usually, private business people engaging in commercial activity for the purposes of generating profits for themselves and/or their shareholders—voluntarily undertake to change the ownership or effective control of one or more broadcasting assets in pursuit of financial gain. As businesspeople, they take a calculated risk that their actions will pay off in terms of profits and value of the business. Tangible benefits are part of that calculation. If their calculations are correct, they reap the benefits of their decision,” it wrote. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca

PIAC, Quebecor, music sector, all oppose Stingray financial relief proposal

Broadcast | February 1, 2022

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PIAC, Quebecor, music sector, all oppose Stingray financial relief proposal

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