ILNF recipients want Corus excluded from the pot until CRTC conducts wider policy review

Local independent news stations want to exclude Corus Entertainment Inc. from the Independent Local News Fund (ILNF) until the CRTC issues a broader policy review – a move the commission promised to make when it approved Rogers Communications Inc.’s purchase of Shaw. Last month Corus asked the CRTC to confirm its eligibility to receive ILNF funds now that it is free of Shaw. “Corus’ entry to the ILNF will best serve regulatory policy and represent the fairest solution. Conversely, denying or delaying this request would leave local Global Television stations across Canada in a precarious and unduly disadvantaged position,” Corus wrote in its Part 1 application. In 2016, the CRTC directed BDUs to contribute 0.3 per cent of their gross revenues from broadcasting activities to the fund. The commission allowed BDUs to use their local expression contribution funds to support their affiliated groups because they are not eligible for the ILNF. When the CRTC was reviewing Rogers’ acquisition of Shaw’s broadcasting assets, the regulator heard concerns that $13 million in annual local expression funding from Corus’s Global stations would be redirected to Rogers-owned Citytv stations. The commission blessed the merger anyway saying it would launch a separate proceeding “as soon as feasible” to deal with the Corus issue. The Local Independent Television Stations (LITS) recipients of the ILNF – a group representing 18 stations serving 14 Canadian markets – said they shouldn’t suffer for the lack of action on the issue. “Permitting Corus to access the ILNF at this time would… inappropriately reward a company and shareholders for benefits derived from vertical integration while failing to ensure that the sale of Shaw to Rogers did not have this foreseeable consequence,” the organization wrote in an intervention filed Friday. LITS noted that Corus failed to provide an estimate or modelling of the impact that its access to the fund would have on the market. The group conducted its own estimation, which found that Corus’ 15 Global stations would eat up more than half of the funding. According to its estimates, that represents less than 10 per cent of Corus’ news expenditures but more than 35 per cent of the ILNF recipients’ news expenditures. “A devastating loss in LITS news funding,” the group wrote. “Moreover, approval of the Corus application would severely distort a funding scheme intentionally designed by the CRTC in 2016 to ensure sufficient support for the most vulnerable independent smaller market stations.” Although Corus is now independent, it continues to serve in larger markets and has access to a larger advertising revenue base, LITS argued. It added that Corus continues to benefit from having been a vertically integrated Shaw enterprise “that no LITS can come close to matching.” RNC Media Inc. and Télé Inter-Rives Inc., part of the LITS group, filed an additional joint intervention to provide context focusing on the French-language market. The companies noted that in 2021 the CRTC raised the allocation cap per station, or group of stations operated by the same licensee in a given market, from 10 per cent to 12 per cent of the funds. The reasoning behind the decision was that BCE Inc. had acquired the over-the-air stations owned by Francophone operator VMedia so any funding that would have been allocated to those stations was available for redistribution. Since then, funding for French-language stations has decreased, according to the two interveners. They argued to the commission that Francophone operators received 34 per cent of ILNF funds in 2018 but only 29 per cent in 2022. “Although Corus is present in Quebec, it does not operate any traditional French-language television station. Given the formula for allocating the funds, as established by the commission, the French-speaking members of the ILNF would have to cede a significant portion of the fund to Corus,” RNC and Télé Inter-Rives argued, according to a translation. The Forum for Research and Policy in Communications (FRPC) echoed the LITS group's concerns over the lack of evidence provided by Corus, adding that it offered no commitments on how it would use the funds. “Corus has not clearly explained how the loss of $13 million amounts to ‘an undue, financial disadvantage’ compared to other large broadcasting groups,” the FRPC wrote in an intervention filed Tuesday. The FRPC noted that, according to Corus’ aggregated financial returns, it spent $105 million on local news in 2022. A loss of $13 million in funding makes up only 12 per cent of that amount. Furthermore, although its local TV services are operating at a loss, its discretionary and radio programming services generated more than $280 million during the 2021-2022 broadcast year. “Granted that Corus prefers to keep the revenue it makes – but should BDU subscribers subsidize programming services when their owners continue to profit from their other broadcasting services?” FRPC wrote. Rogers filed an intervention Tuesday arguing that Crous is losing less money than anticipated because local expression contributions have declined. According to Rogers, Shaw directed $11.5 million to Corus for the 2022 broadcast year. Rogers projects that the amount of funding it will redirect to Citytv’s local news operations “will be considerably less than” the amount that Global received. Rogers disputed Corus’ claim that Citytv will face an unfair competitive advantage due to this redirection of local news funding. It argued that both companies must meet the same regulatory requirements even though Citytv operated with a $25 million news budget in 2022 while Global’s budget was set at $136 million. Rogers further stated that should the CRTC decide to include Corus as part of the ILNF recipients and should it decide there is a need to up the funds, it is not on BDUs to foot the bill. “This dramatic reduction in the amount of local news funding, which coincides with the decline in subscribers experienced by the entire Canadian BDU industry, has accelerated over the past decade because of intense competition from unregulated foreign online broadcasting undertakings. As has been recognized by Parliament, BDUs can no longer be expected to act as the primary source of funding for the Canadian broadcasting system,” Rogers wrote. Corus also filed an application with the CRTC asking for a reduction to its Programs of National Interest contribution, its Canadian Programming Expenditure requirements, and to discontinue its obligation to contribute 0.17 per cent of last year’s revenues to the FACTOR and Musicaction funds. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca.

ILNF recipients want Corus excluded from the pot until CRTC conducts wider policy review

Broadcast | June 29, 2023

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

ILNF recipients want Corus excluded from the pot until CRTC conducts wider policy review

Broadcast | June 29, 2023

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Corus revenue, profit decrease for Q4 and fiscal 2024

Rogers wants Corus’ undue preference allegations dismissed by CRTC

Unions opposed to broadcasters’ calls to lighten regulatory load until C-11 is fully implemented

Corus still feeling effects of advertising recession

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us