The Canadian Radio-television and Telecommunications Commission has published a new policy designed to ease the economic pressure squeezing local television newscasts in the same week in which a report was published clarifying how quickly young Canadians are pivoting to digital news platforms.
Under ss. 34 and 52(1) of the Broadcasting Distribution Regulations, broadcast distribution undertakings (BDUs) – think Rogers, BCE, Videotron, Telus and Shaw – must contribute 5% of annual gross revenue from broadcasting activities to a handful of funds that support Canadian programming. The CRTC’s new policy framework for local and community television (Broadcasting Regulatory Policy CRTC 2016-224) allows BDUs to devote part of this contribution to the production of local news on local television stations by providing them with the flexibility to transfer contributions from one community channel to another and to dedicate all or part of their local expression contribution to fund local news programming. The explicit intention of this flexibility is to encourage BDUs to shift funding from community stations to the production of local TV news. As CRTC Chairman Jean-Pierre Blais told the CBC this week, “Instead of putting money, year after year, into community channels . . . that money should be allowed to be flexed into news.”
The rebalancing is, in part, a response to a challenging advertising market roiled by rapidly evolving media consumption habits. “As economic pressures increase,” explains the CRTC in the Policy, “resources may decrease, threatening the integrity of editorial decisions and weakening the ecosystem for local news gathering, production and dissemination across all Canadian media.” The CRTC illustrated the economic pressure: “Conventional television stations, the primary source for the local news and information Canadians receive, are not as profitable as they were five years ago and that some may be at risk of closing.” Profit before interest and taxes (PBIT) margins for private conventional television stations have declined from 7.1% in 2011 to an estimated -8% in 2015; and PBIT margins for private conventional television stations in 2015 are estimated to be at -7.6% in markets with more than one million people, -3.5% in medium markets and -15.9% in markets with fewer than 300,000 people.
The Reuters Institute for the Study of Journalism at the University of Oxford’s Digital News Report was also published this week and it suggests that the pressure is rooted in demographically-tied changing media consumption habits that may be impossible to reverse. The Reuters/Oxford report canvassed 56,000 people in 26 countries, including Canada. It confirmed that television remains a preferred news source for older generations but is losing traction with younger people. In the three years between 2013 and 2016, the number of people under 35 in the United Kingdom who use TV as a source of news fell by 21% to 42%. The corresponding drop was 20% in France and 11% in the US. The study did not include a Canadian figure. On the other hand, fully 71% of Canadian respondents told researchers that they still turned to television as a source of news at least once a week. This compares to a high of 83% in Italy and a low of 65% in Australia. In other words, TV news may be dying but it’s far from dead.
Other highlights of the Policy in brief:
Exhibition levels remain unchanged. Commercial English-language stations will continue to be required to broadcast at least 7 hours of local programming per week in non-metropolitan markets and at least 14 hours per week in metropolitan markets. Local programming requirements for commercial French-language stations will continue to be assessed on a case-by-case basis, using a benchmark minimum of five hours of local programming per week. However, all licensees will be required to broadcast a minimum level of local news and to allocate a percentage of their previous year’s revenues to such programming, with the exhibition and expenditure levels to be determined on a case-by-case basis based on historical levels.
New Independent Local News Fund. As of September 1, 2017, a new fund, to be named the Independent Local News Fund, will replace the Small Market Local Production Fund (SMLPF) with the objective of supporting the production of locally reflective news and information by private independent television stations. It will be funded by BDUs which will contribute 0.3% – about $23 million in total – of their previous year’s broadcast revenues. As an interim measure, as of September 1, 2016, vertically integrated broadcast ownership groups will be ineligible for the SMLPF.
Adjustments to the community television framework. A handful of adjustments were made to ensure that the community television framework continues to promote the objectives of the Broadcast Act. These include increasing over time the minimum proportion of local expression expenses that broadcast distribution undertakings must allocate to direct programming costs from the current requirement of 50% to 75%, requiring BDUs to create citizen advisory committees for community channels in markets with a population of over one million people and encouraging BDUs and access producers to make content available on multiple platforms to all Canadians