29 local TV stations at risk of closing by 2020: report

A report from independent consultant and lawyer Peter Miller and research company Nordicity says that 50 per cent of Canada’s small- and medium-market local TV stations could close by 2020. The report, prepared for advocacy group Friends of Canadian Broadcasting and the union Unifor, and submitted by Friends as part of the CRTC’s consultation on community and local television, found that “Canada’s local television heritage is at risk of major cutbacks and station closures.” It said 29 of 56 stations could close in the next five years. Interventions in the proceeding looking at local and community TV —which will also include a hearing in January 2016 — were due Friday. The report, dated Nov. 5, said those potential closures would mean “the loss of local news and other local programming to over 20 already underserved small markets in Canada” and elimination of “an estimated 910 fulltime equivalent jobs” by 2020. Canada currently has about 90 private stations, of which 56 are in small or medium markets, and 27 stations owned and operated by CBC/Radio-Canada, it noted. If the CRTC should “fail to establish an appropriate new model to support local TV” as a result of its consultation, “we believe it is reasonable to expect that as early as 2017, and certainly by 2020,” nine out of 19 of small-market independent stations will have closed. So will three out of four of BCE Inc.’s small- and medium-market local CTV2 stations in Ontario, nine small- and medium-market "Bell CTV and CBC-affiliate stations,” four of seven of Shaw Communications Inc.’s small- and medium-market stations and four French-language stations, it predicted. “The possibility that closures could be even more extensive, and include large-market stations, cannot be dismissed,” the report said. “Bell’s entire CTV 2 network, and all its associated local stations, could be shut down. A number of Rogers OMNI stations, whose financial difficulties and local news restructuring have been documented, could face a similar fate,” the report said. “And while we do not necessarily share the view that all local TV stations in Canada will be shut down by 2025, we do believe that this could well be the case for small and medium-market stations,” it added. That risk, the report said, “could be avoided, deferred or minimized” if the CRTC were to reallocate “local expression” contributions TV providers must make to private small- and medium-market TV stations. At the same time, it cautioned that would not be enough to totally solve the problem, noting that “the decline in fortunes of private TV in Canada cannot be solved, either completely or permanently, by a diversion of BDU contributions. There simply would not be enough money.” The report cited CRTC figures that show the 2014 broadcast year saw a 7.2 per cent decrease in private local TV revenues, while preliminary results for 2015 indicate at least a 10 per cent revenue drop, which would make the five-year decline more than 25 per cent, it added. “At this rate of financial losses, station groups big and small will inevitably conclude that losses are not sustainable, and that severe cost cutting measures must be deployed,” it said. Small-market independent stations, which “operate in Canada’s smallest markets, and have little to none of the operating or corporate synergies of their vertically integrated brethren” are at the greatest risk, and any redirection of funds should make them the priority, followed by other small- and medium-market stations, the report suggested. The decline in revenues for conventional TV over the past several years “was initially constrained by the CRTC’s LPIF, which supported expenditures on local programming on designated stations from an incremental percentage of revenue contribution from BDUs,” it said, noting the Local Programming Improvement Fund was phased out by the CRTC in 2014. As a result, “programming costs, having been pushed down to a ten-year low of $1.36 billion in 2011 (or 63.4% of revenue), rose to $1.44 billion in 2012, and on a percentage-of-revenue basis, continued to climb to 77.5% in 2014,” it added. “The 2015 broadcast year was the first without any LPIF funding. As a result, many small and medium-market stations will have cut to the bone to keep operating.” The report said that it is “reasonable to assume that, barring a fundamental shift in public policy framework, Canadian local TV will experience a dramatic reduction in numbers of local stations and hours/quality of local programming, beginning most noticeably with small and medium-sized market stations. Even for the large market stations, there will be increased pressure to cut costs – which include local programming.” Policy decisions also threaten the viability of local TV, it added, including the elimination of simultaneous substitution for the Super Bowl and the decision to repurpose 600 MHz spectrum for wireless use, which could cost local broadcasters as much as $500 million. The report added: “Should the Commission be able to fast track decisions on the creation and implementation of a model to support local TV, a local TV crisis may be averted.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Shruti Shekar at sshekar@thewirereport.ca

29 local TV stations at risk of closing by 2020: report

News | November 10, 2015

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29 local TV stations at risk of closing by 2020: report

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