Who pays for local programming on TV?

August 24 2009 by Ellen Roseman

TV stations should pay for local programming, since they have the advertising revenue to support it. But they’re crying poor and saying that costs should be subsidized by cable TV and satellite TV operators.

The Canadian Radio-Television and Telecommunications Commission agreed and told the cable and satellite companies to set up a local programming improvement fund (LPIF). But it didn’t tell them they had to absorb the cost.

Result: Consumers pay the bill. The carriers just downloaded it onto us.

Many customers of Rogers Cable wrote to me after receiving letters about the new charge. But Bell is also asking customers to pay without even advance notice by mail. Instead, it has a notice at its website.

You have to wonder about a government agency that imposes a sizeable charge — and increases it at the last minute before it takes effect on Sept. 1 — and acts surprised when it’s passed along to customers. The outcome was predictable. So why not do something to head it off?

If you write to the CRTC, this is a typical answer you receive:

The CRTC established a Local Programming Improvement Fund (LPIF) to conserve and improve local television programming. In establishing the appropriate level of contributions to be paid by cable/satellite companies to broadcast local programming, the CRTC considered a number of factors including the ability by cable/satellite companies to contribute to the Canadian broadcasting system.

Given their reported profits, the CRTC is of the view that there is no justification to pass the cost on to consumers. If your cable/satellite company has decided to increase the fees for your service, it is a business decision that is not regulated or mandated by the CRTC.

Let’s not get carried away by our distaste for Rogers and Bell. Let’s also lay the blame where it belongs on the CRTC, which didn’t do its regulatory duty.

And let’s not forget CTV, which overpaid for broadcast rights to the Vancouver Olympics. With its ad revenues shrinking, it then had to orchestrate a campaign to transfer local programming costs to Canada’s cable and satellite companies.

15 comments

  1. G. C. Hodgson

    Aug 25 2009

    The CRTC is broken. It doesn’t represent the interests of Canadians as a whole but, rather, the entrenched interests of the telco oligopolies. The above is just one example of the CRTC dropping the ball. Another is its failure to hold Bell accountable for its anti-competitive behaviour towards its wholesale internet customers.

    I think it’s beyond time to abolish the CRTC as it now stands and institute a new commission that will actually do the job the CRTC is failing to do.

    You can sign the petition to abolish the CRTC:

    http://dissolvethecrtc.ca/node/1

    Online petitions aren’t worth the paper they’re printed on, but it’s a start and maybe, if enough people sign, it will gain some attention to an issue that has been ignored for too long.

  2. Paul Griffin

    Aug 25 2009

    A few points:

    1) My understanding is that the monies collected by the networks DO NOT even have to be used for local programming. Another case of the CRTC caving. So now there’s even more money to buy US programming, which may or may not be shown. More Canadian programming?? Surely, you jest.

    2) It is totally unfair that we are to be charged a % of our total bill and not some flat fee. So for those (like myself) who already support the networks and Bell by subscribing to more services, including all those obscure niche channels, we get hit even harder, to the point that I will likely drop some programming to achieve a “neutral” position. But I suppose the networks will then go hat in hand to the CRTC when people stop watching their “chimpanzee” channels. And don’t forget, come July 1/10, we will be paying another 8% thanks to Dalton.

    3) And lastly, to the folks who went to CFTO’s splashy new High Definition studio open house a few months ago: Did you sign their CRTC petition regarding local programming? Did they explain, in the interest of fairness, how YOU could end up paying? Was the free hot dog good? What’s the taste in your mouth today?

  3. Dave Ings

    Aug 26 2009

    Finding most TV programming to be mindless, my wife and I canceled our cable service almost two years ago. We don’t miss it much and I’m able to avoid the various taxes and fees imposed by unelected CRTC bureaucrats.

    Cable TV is arguably a dinosaur service in any event, on the verge of being swept away by direct distribution over the Web. The actions of the CRTC will most likely accelerate this trend.

  4. David

    Aug 26 2009

    Some simple math: The fee was already 1% of gross, making an annual fund of $68 million, according to the CRTC.

    The CRTC is temporarily (as they say) increasing this fee from 1% to 1.5%. That’s a 0.5% increase, bringing the estimated fund to $100 million. A difference of about $35 million.

    I am not too upset about this 0.5% fee being passed along to consumers. There’s debate for the fairness either way.

    What bothers me is that the fee being passed to consumers is the full 1.5%. Not only is the revenue of the increased fee being passed along, but Rogers is therefore taking this opportunity to increase its own revenue, making the CRTC out to be the bad guys.

    “Rogers spokesperson” said “The yearly cost to absorb the new CRTC LPIF contributions by cable TV and satellite companies would be tens of millions of dollars. It would impact innovation and the delivery of future services like new HD and Digital channels, multicultural and on-demand programming.”

    So instead of losing tens of millions, the industry is now making an extra 2 times tens of millions; does that mean we’ll see a marked increase in innovation and special services? I highly doubt it.

  5. JE

    Aug 29 2009

    Canada once again proves that it is a dinosaur when it comes to technology and consumer rights. We are charged a system access fee for cellphones and now a fee for local programming? A Rogers customer service rep informed me that CRTC mandated that the fee be charged to consumers; quite different than what the Rogers spokesman claims.
    Quite frankly, I don’t watch any local programming because it isn’t worth watching and this fee isn’t going to make programming any better. I’m still holding out hope for competition in cable, but as long as CRTC runs things it won’t happen in my lifetime (and I’m only 28).

  6. Cynthia

    Aug 30 2009

    It’s not just Bell and Rogers. My august bill from Eastlink had an additional 79 cents put on bringing my analog cable bill to over $60/month. There was no notice in my bill that this was going to start appearing on our bill in august, but they still managed to waste money by placing an envelope in my bill when I’ve been paying online for over 5 yrs.

  7. Mark Henschel

    Sep 7 2009

    Notwithstanding the problematic CRTC ruling, the benefits of cable as described by the Rogers monopoly representative — namely, the OTA (over the air) signals are funded through advertising and receive benefits from our distribution, including improved picture and sound, priority placement on the dial and simultaneous substitution — are minimal with the advent of digital signals.

    In fact, OTA HD is typically uncompressed and better than that provided over cable.

    And my experience with Rogers is that glitches in picture and sound are inexplicably worse than the broadcast signals I can receive in Markham — which are free.

  8. Kevin Crannie

    Sep 13 2009

    Bell and Rogers are saying that the 1.5% LPIF is a mandated fee that consumers have to pay. Unfortunately, this is not true.

    It is a fee that cable and satellite companies are required not to pay. In my conversation with the CRTC of August 15, 2009, it was stated to me that it is my choice whether to pay the fee or not; I am not required to pay the fee, as it is NOT a mandated fee by the CRTC.

    That said, each month I’m deducting the 1.5% LPIF fee from my cable bill. This is a fee that Rogers and Bell are required to pay.

    As a customer of Rogers cable, this is the third increase in one year. In October 2008, Rogers slapped customers with a 0.5% LPIF fee; in March 2009, Rogers raised cable rates by 9%; and in September 2009, Rogers passes the cost of 1.5% LPIF fee onto consumers.

    In a written statement to the President and CEO of Rogers, I’ve expressly stated that I will not be paying the 1.5% LPIF fee, as I’m not required to pay this fee.

    The wording of the CRTC should have read that cable/satellite companies are restricted from passing the 1.5% fee onto consumers.

    The blame must be laid on the shoulders of the CRTC for failing to stipulate what is required of cable/satellite companies.

  9. Michelle Obama

    Oct 5 2009

    The onus falls upon the Government of Canada, for not knowing how to co-ordinate the falling of prices with improved technologies for all of its constituents, coast to coast.

    http://www.shoutle.com/unfettered-crapulent-advertisements.html

    Ellen, darling, keep up the good work! If Canadian Telecoms have to increase prices, then, it means that the Government should open doors to all the other Telecom giants so that we can all fairly compete at the market. At this point, Canada is the perfect haven for antitrust violations, in the name of its own decrepit communications authority and boards.