12/19/2011 03:25 EST | Updated 02/18/2012 05:12 EST

CRTC to review funding for local TV programming

Canada's broadcast regulator will undertake a review of the Local Programming Improvement Fund, a controversial subsidy supporting development of local television programming.

The Canadian Radio-television and Telecommunications Commission issued a call for comments on Monday, saying it was interested in:

- Evaluating the performance of recipient stations.

- Whether there should be a requirement for additional spending on local programming as a condition for receiving funding.

- Eligibility for the fund and the funding allocation formula.

- Cable and satellite companies’ contributions to the fund.

- Whether to maintain, modify or abandon the fund.

Increased funding support sparks controversy

In 2009, the CRTC ordered broadcast distributors such as cable and satellite companies to increase their support of local programming after broadcasters said they could not continue to provide such programming — such as local news and other content for non-metropolitan markets across Canada — unless they received additional support. About 75 Canadian stations currently receive money from the fund.

The Canadian cable and satellite carriers, who pay the $100-million annual cost of the fund, objected to the CRTC's imperative to increase their payments and said they would pass any new fees directly onto their consumers. An LPIF fee continues to appear on cable and satellite bills as a separate line item for customers.

However, the broadcast environment has changed dramatically since 2008, when conventional over-the-air broadcasters were suffering from declining ad revenues and complaining that the TV funding model was broken.

Ad revenue has bounced back after the economic downturn. A CRTC study showed revenues for private conventional TV rose nine per cent in 2010.

Media consolidation

Another significant change since 2009 has been the further integration of media giants such as Bell, Rogers and Quebecor, who each have cable or satellite interests as well as broadcast networks.

For instance, Quebecor/Vidéotron launched Sun TV and continues to operate French-language TV networks, Bell Globemedia is parent company to CTV, while Rogers operates networks such as Citytv and Omni.

The profitable cable and satellite arms of each of these companies is required to pay into the LPIF, while their broadcast networks can draw from the fund.

Any reduction in the LPIF would also hurt the CBC, as it is rebuilding its local service.

In May, the CRTC signaled its continued interest in supporting local programming when it ordered satellite carriers to carry more local stations.

Monday's LPIF review announcement is not a surprise: it had been scheduled for review after three years.