The CRTC and the Local Programming Improvement Fund: A Primer

April 11, 2012 in debates

 

 

 

On Monday, April 16th the CRTC will begin hearings to evaluate the progress and impact of the Local Programming Improvement Fund (LPIF), implemented in 2008/2009 to stem the evacuation of local programming amongst Canada’s “non-metropolitan” television stations. It is fortuitous timing then that the Journal Strategies Conference should parallel the LPIF hearings, since both are concerned with the future of news and information in our country. Indeed, while Journalism Strategies seeks to address the “role of professional journalism in our democratic lives,” the primary goal of the LPIF is to “ensure that viewers in smaller Canadian markets continue to receive a diversity of local programming, particularly local news programming” (CRTC 2008-100, par.359) With this in mind, we thought that a primer on LPIF would be of benefit to those interested in the regulatory approaches to the “crisis” of western journalism, particularly at the local level.

Much of the following information is taken from the CRTC’s Broadcasting Notice of Consultation 2011-788, supplementary information can also be found in the following CRTC notices and rulings: 2008-100; 2009-406; the CRTC’s primer on LPIF; and the Standing Committee on Canadian Heritage’s 2009 report, Issues and Challenges Related to Local Television.

Origins

In brief, the LPIF is a resource available to non-metropolitan television stations (non-metropolitan defined as a population of under one-million) to fund local programming initiatives, particularly local news and information. This includes both public and private stations, but it was decided in 2010 that community television stations would not be eligible. The fund is sustained by a levy on cable and satellite distributors (“Broadcast Distribution Undertakings” or “BDUs”) and is now in its third year of operation.

The LPIF was created by the CRTC in 2008, during the Commission’s review of BDUs. It was further revised in 2009, and scheduled to commence meting out funds during the 2009-2010 broadcast year. LPIF came about in the midst of an economic downtown in conventional television resulting in a number of station closures and cancellation of local newscasts, particularly within small and medium market stations.  This also anticipated the battle for “fee-for-carriage,” (now called “value for signal”) which saw broadcasters challenge BDUs for the right to charge for their signal. Broadcasters argued that the local broadcasting model was “broken” due to the economic downturn and the ongoing audience transition to digital media. As such they sought a ruling from the CRTC to be allowed to charge BDUs for their signal, thus deriving a stable source of revenue beyond that of advertising. While value for signal remains unresolved, this concern for local broadcasting, and in particular, local news and information got to the point where a 2009 Standing Committee Report noted that there was a “crisis of local television” in Canada. The CRTC was thus in search for new regulatory mechanisms to ensure the survival of local programming (in particular, news and information), which several reports and rulings noted was important to viewers, to an informed citizenry, and to Canadian democracy. The LPIF, can be read as a temporary solution to this perceived “crisis,” with three primary objectives:

1)    to ensure that viewers in smaller Canadian markets continue to receive a diversity of local programming – particularly local news programming

2)    to improve the quality and diversity of local programming broadcast in these markets; and

3)    to ensure that viewers in French-language markets are not disadvantaged by the smaller size of those markets.  (2008-100, par. 359)

Structure

The initial 2008 document established the LPIF as financial assistance to stations in non-metropolitan markets to improve and increase local programming (re: local news and information). It also established that BDUs would contribute 1% of their gross revenues (from broadcasting activities) to sustain the fund (which also ups overall contributions of BDUs to Canadian programming from 5% to 6% of these revenues). To equalize the disparities amongst French and English broadcasters it was decided that a full third of the fund would go to stations in French-language markets and the remainder to those in English-language markets. The fund, pegged at around $68 million, was to be distributed by the Canadian Association of Broadcasters (CAB) and was initially meant to be contingent upon stations increasing their local programming expenditures.

In a 2009 ruling, the CRTC enacted guidelines for eligibility to the LPIF, and drafted markers of success for the program. In recognizing the strength and profitability of the BDU operators, the CRTC also increased the levy from 1% to 1.5% thus increasing the fund from approximately $68 million to approximately $100 million.  The CRTC also eliminated the requirement that stations increase expenditures to local programming. The allocation formula was also amended, such that now:

  • One third of the overall LPIF would be allocated equally to eligible stations across both Francophone and Anglophone markets
  • The remaining two thirds…would be divided such that 30% would be directed to Francophone markets and 70% to Anglophone markets
  • These amounts would be allocated on the basis of three-year historical average spending on local programming, with an allocation proportionate to the percentage of LPIF funding to all eligible stations within a linguistic market. (2011-788, par. 43)

To access the fund, non-metropolitan conventional television stations must be able to prove that they provide original local news, and broadcast a minimum of 7-hours per week of local programming for English language stations, and 5-hours per week for French language stations. The CRTC also considered factors such as “local presence” of television stations as important contributions to Canadian programming.

A list of eligible stations can be found here.

Markers of success were also established and will form the backbone of the Commission’s hearings next week:

  • evidence of audience success and viewer satisfaction
  • increases in local advertising revenues
  • increases in local news stories
  • the number of local stories that are picked up nationally
  • expansion of news bureaus; and
  • increases in the quantity of local programming broadcast (2011-788, par. 29)

Hearings

By the CRTC’s initial assessments, it seems that the LPIF has performed satisfactorily, with levels of expenditures for local news programming on the rise. The LPIF even garnered high praise from Friends of Canadian Broadcasting, which wrote in its intervention: “Friends congratulates the Commission on the outstanding success of the LPIF in stabilizing and maintaining local programming in many Canadian communities, where its demise was widely expected, and much feared.” The intervention of Channel Zero, owner of CHCH Hamilton, also testifies to the success of the program:

In an era of constant change and significant competition, the LPIF is the stable

foundation, from which CHCH can operate, innovate and be successful in the most  challenging of environments. (p.3)

The hearings are designed to evaluate the performance of the LPIF after its first three years of operation through the lens of the aforementioned “indicators of success.” The Commission will also evaluate such factors as whether stations should commit to “incremental expenditures on local programming;” the allocation formula; the level of contribution from BDUs and whether the LPIF should continue.

One of the more interesting questions asked by the CRTC is the impact of vertical integration on local broadcast markets. Implicitly referencing the recent takeovers of CanWest and CTV by Shaw and BCE respectively, the CRTC observed that “large media companies are now both contributors to and recipients of the LPIF.” As such, the Commission asked: “to what extent, if any, should the nature of a station’s ownership structure within a vertically integrated entity be considered in terms of LPIF eligibility?” Vertical integration has certainly been a contested topic within Canadian media policy studies, and has recently been ruled upon by the CRTC itself. Given that so many eligible stations are owned by BDUs, this is indeed a pertinent issue on the table.

A second issue is whether community broadcasters should be able to access the fund. This is the centerpiece of the intervention filed on behalf of the group, Canadian Association of Community Television Users and Stations (CACTUS). An interesting parallel is also that of the CBC’s eligibility to the fund. While in 2008 the CRTC permitted non-metropolitan CBC stations to access the fund, some have contested this permission (see Shaw and Bell Canada’s interventions). As such, “eligibility criteria” will certainly be an interesting component of these hearings.

LPIF and Journalism Strategies

While campaigns over the “TV Tax,” “Local TV Matters,” and “value-for-signal” have quieted in recent years, the underlying concerns for local television, and in particular, local news and information on Canadian television screens remains a seminal issue. The LPIF represents one way in which Canadians living outside the major centres of Toronto, Vancouver, Montreal, Calgary, Edmonton, and Ottawa can continue to hear their stories and voices reflected back to them on television. Importantly, however, it can still be read as a stopgap as we wait and see how the coming years will impact the local television industry, and how the Supreme Court will rule on the value for signal debacle. Nonetheless, with local news and information the topic of several presentations at Journalism Strategies, the debate over LPIF is an important contribution to the question of how to best provide local news and information to Canadian communities in a digital age.

Christopher Ali is a Doctoral Candidate at the Annenberg School for Communication, University of Pennsylvania

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