Corus allowed to expand CanCon underspend, provided it’s paid off next year

The CRTC has allowed Corus Entertainment Inc. to reduce its mandated Canadian programming expenditures (CPE) in a single year, but declared any shortfall must be made up in the following year. In a Friday decision the regulator approved Corus’ application for its maximum CPE under-expenditure in a single year to be increased from five per cent to ten per cent, but ruled those under-expenditures must be paid during the next year, denying a Corus request to be able to push it back to the end of its licence period. In its application, Corus said its requested changes were necessary because “significant” revenue swings over the last two years would cause an unanticipated spike in its CPE for the 2019-20 broadcast year. CPE requirements are based on the gross revenues of the previous broadcast year, with Corus required to spend 30 per cent of its gross revenues under its licence agreement. The decision means Corus can spend 27 per cent of its gross revenues of the previous broadcast year on Canadian programming in a single year, instead of its previous level of 28.5 per cent, provided the remaining three per cent underspend is paid in full in the next broadcast year. The total amount Corus spends on the development and acquisition of Canadian content throughout its licence period will remain the same. Corus argued being made to spend a higher amount on Canadian programming than predicted within such a tight timeframe would hinder its debt repayment strategy and result in it making sub-optimal programing investments. In its decision, the CRTC said permitting Corus to increase its CPE underspend to ten per cent would result in a maximum annual expense fluctuation that would represent less than one per cent of the overall CPE paid by Canada’s licenced broadcasters, and less still when Canadian production commissioned by domestic and foreign online services was factored in. But the regulator denied Corus’ application for the underspend to be cumulative, provided it was paid off in full by the end of the licence term, stating the fluctuation in CPE between the second last and last year of the licence term risked being “substantial” if the underspends were allowed to accumulate. “In the Commission’s view, this could force Corus to spend significantly in the final year of the licence term in order to adhere to its CPE obligations, particularly given that, as stated by Corus, only a portion of the additional cash expenditures would count as eligible CPE in the first year of the broadcast of content,” the CRTC said in its decision.

Corus allowed to expand CanCon underspend, provided it’s paid off next year

Brief | July 10, 2020

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Corus allowed to expand CanCon underspend, provided it’s paid off next year

Brief | July 10, 2020

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