On June 15, 2016, the Canadian Radio-television and Telecommunications Commission (CRTC) released a new regulatory framework for local and community television (Broadcasting Regulatory Policy CRTC 2016-224). Following a public consultation process that began in September 2015, the Commission’s new policy takes steps intended to ensure that Canadians continue to have access to local programming that reflects their needs and interests, in particular, local news and community access programming. This programming helps Canadians stay informed and express themselves.

The new framework maintains current requirements for local programming, but brings considerable changes in other areas, including new definitions of “local programming” and “local news”, and new funds for producing local news programming. The policy also adjusts the framework for the community channels run by licensed cable, satellite and IPTV broadcasting distribution undertakings (“BDUs”). Overall, the decision aims to reallocate existing funds currently available within the Canadian broadcasting system to local and community programming rather than increasing overall expenditures, and provides greater flexibility in how and where local programming is funded and created.

Maintaining Programming Broadcast Requirements, with new Local News Requirements

In the framework, the Commission maintained its current requirements for airing of local programming. Commercial English-language television stations must broadcast at least 7 hours of local programming per week in non-metropolitan markets and at least 14 hours per week in metropolitan markets (Toronto, Montreal, Vancouver, Edmonton and Calgary). Local programming requirements for commercial French-language stations are assessed on a case-by-case basis, using a benchmark minimum of 5 hours of local programming per week.

The Commission added the new requirement that all licensed television stations must broadcast a minimum level of local news and to allocate a percentage of their previous year’s revenues to such programming. Exhibition and expenditure levels for local news will be determined at licence renewal, based on historical levels.

New Definitions of Local Programming and Local News

The Commission agreed that the current definitions of local programming, local presence and local news were unclear and inconsistently interpreted. This resulted in Canadians’ experiences of local programming varying significantly. The CRTC therefore altered its definitions: all local programming must be locally relevant, while all local news must be locally reflective.

  • Local programming will be considered locally relevant if it is of interest to the community or market being served.
  • News programming will be considered locally reflective if it meets all of the following criteria:
    • the subject matter relates specifically to the market a station is licensed to serve;
    • it portrays an onscreen image of the market by, for example, including its residents or officials or featuring coverage of its municipal or provincial government; and
    • it is produced by the station's staff or by independent producers specifically for the station.

The Commission did not adjust its definition of local presence or impose a specific local presence requirement, but it pointed out that to meet the obligations for local news, television stations would have an incentive to maintain a local presence.

Funding from BDUs for Local News

Even with developments in online media, the Commission found that Canadians still rely on television to receive local news and that there were challenges in funding this type of programming. The Commission determined that there are sufficient sources of funding within the broadcasting system to fund locally produced, locally reflective programming and news, but meeting this objective required rebalancing of these resources. The Commission determined that while vertically-integrated (VI) media groups have the resources and synergies necessary to continue operating high-quality local programming, most independent local television stations did not.

Leveraging the Resources of BDUs and VI Groups

Under the new policy, BDUs will be able to gauge the needs of subscribers before deciding how to spend all or part of their allowable contribution to local expression, depending on whether the market served is metropolitan or non-metropolitan. This grants flexibility to transfer contributions from one community channel to another, or to use all or part of the local expression contribution to fund local news programming on television stations, under the following scheme:

  • All independent local stations will be designated to receive contributions to local news. However, the VI groups will be required to maintain the operation of all of their local stations over the new licence period to benefit from this flexibility. This requirement will be addressed as part of the stations’ licence renewals.
  • Terrestrial BDUs in metropolitan markets will be permitted to direct their local expression contribution to community programming in other markets and/or to designated local television stations to produce local news.
  • Terrestrial BDUs in non-metropolitan markets will be required to devote at least 50% of their local expression contribution to community programming in their own markets and may allocate the other half to community programming in other markets and/or to designated local television stations to produce local news.

Creation of a new local fund for independent broadcasting

Under the new policy, the Commission will replace the Small Market Local Programming Fund (SMLPF) with the new Independent Local News Fund (ILNF) as of September 1, 2017. The ILNF will support independent operators in smaller localities like Victoria, Prince George, Thunder Bay, Hamilton, Gatineau and St-John’s but also Montreal.

BDUs will be required to contribute 0.3% of the previous year’s broadcast revenues to the ILNF. This will result in approximately $20 million in funding to support the creation of local news by independent television stations.

Beginning on September 1, 2017, BDUs will contribute to Canadian programming the equivalent of 5% of its gross revenues from broadcasting activities in the previous broadcast year, less its required contribution to the ILNF and any allowable contribution to local expression over the current broadcast year.

Adjustments to BDUs’ Community Channels

The Commission stated that BDUs’ stewardship over community channels remains an appropriate model and that most stakeholders said they were pleased with the current model.

However, the Commission identified concerns about funding for community programming, specifically how much funding should go to direct programming costs or indirect costs. It decided to gradually increase the minimum contributions that BDUs must allocate towards direct programming costs, increasing 5% per year from 60% in 2018 to 75% in 2021 and onwards.

The Commission will also require BDUs to establish citizen advisory committees for community channels operating in markets with a population of over one million people. Based on the current environment, ten advisory committees would be required:

  • Toronto: Rogers, BCE
  • Montréal: Videotron, BCE
  • Vancouver, Calgary and Edmonton: TELUS, Shaw

Each committee must include members of various Aboriginal, cultural, linguistic and ethnic groups in the community. The committee requirement will be implemented as conditions of licence effective September 1, 2017.

Takeaways

This new framework indicates the Commission’s interest in ensuring the vibrancy of Canadian local programming and local news in particular. While the Commission acknowledged the declining revenues achieved by local television stations, it concluded that the existing resources in the system, if properly arranged and allocated within the Canadian broadcasting system, would be sufficient to ensure that Canadians continue to have access to local programming that meets their needs and interests. The Commission also published a notice of consultation to launch the renewal process for television licences owned by VI groups, to begin in November 2016. Given that these new requirements relating to local programming and local news will be imposed as conditions of licence on television stations and BDUs, local programming, including local news, will continue to have a visible presence on television screens in Canada.