Broadcasters Say 30 Stations Could Go Off The Air Without Local TV Fee

Canada’s major broadcasters say as many as 30 local TV stations are at “immediate risk” of going off the air if they can’t convince cable and satellite companies to start paying for local programming.

Representatives from CTV, Global, CBC and A Channel launched a campaign Thursday in Toronto to lobby for the right to negotiate a so-called fee for carriage with cable companies.

Paul Sparkes, executive vice-president of corporate affairs for CTV, said the current model for Canadian television is “broken.”

“The foundation of the Canadian broadcasting system is crumbling,” Sparkes said.

“Local television stations from Victoria to St. John’s are heading, unfortunately, for financial ruin. They cannot survive by a single source of revenue.”

The broadcasters said the survival of many small-and medium-market TV stations is threatened by slumping ad revenues.

It’s the latest salvo in a battle over so-called “fee-for-carriage,” which pits the broadcasters against cable providers, who say the fees could add up to Canadians paying up to $10 more per month on their cable or satellite bill.

Conventional TV providers, who saw their profits plummet by almost 93 per cent in 2008, are asking the Canadian Radio-television Telecommunications Commission to allow for negotiations with the cable and satellite companies regarding a fee for carriage to help offset this loss of revenues.

The broadcasters say it’s unfair that the cable providers profit from their programming while they don’t see a cent.

“It’s pretty basic,” said Sparkes. “They’re taking our programming, selling it to you the consumer, charging for it on your bill and not paying anything back to the people who are doing the hard work.”

Bell (TSX:BCE), Bell Aliant (TSX:BA.UN), Cogeco (TSX:CGO), EastLink, Rogers (TSX:RCI.B) and Telus (TSX:T) have their own campaign called “Stop the TV Tax,” and they claim the traditional broadcasters already get enough money from a local programming improvement fund and are just asking for more handouts.

But Charlotte Bell, senior vice-president of regulatory and government affairs at Global, said that just like a grocery store pays its suppliers, cable companies should have to do the same.

“It’s not a tax, it’s the price of doing business,” Bell said. “Every business pays its suppliers for the products they use to resell and profit from.”

Without the ability to negotiate a fee for carriage, seven stations in Ontario alone and 20 to 30 across Canada are at risk of going off the air, said Bill Chambers, vice-president of brand, communications and corporate affairs at CBC.

CTV has already been struggling to keep stations afloat in some local markets. Shaw Communications Inc. (TSX:SJR.B) had agreed to buy three stations CTV put up for sale in Brandon, Man., Windsor, Ont., and Wingham, Ont., but pulled out in late June.

The decision left CTV scrambling to find alternative solutions for the stations. Earlier this month, the broadcaster announced that it would keep its A Channel station in Windsor open until at least Aug. 31, 2010.

Meanwhile, it has also applied to the CRTC to turn its Wingham station into a full re-broadcast of the A Channel station in London, Ont.

However, the station in Brandon wasn’t so lucky. After would-be buyer Bluepoint Investments Corp. pulled out of a deal to buy CKX-TV for $1, the station went off the air last Friday, putting 39 people out of work.

Peggy Hebden, station manager for A Channel in Barrie, Ont., said Canada can’t afford to lose any more stations like the one in Brandon.

“Local broadcasters in small communities across Canada tell the stories our viewers care about: how a big new box store affects local shopkeepers, how schools are dealing with drugs and violence, what city councils are doing about recycling,” she said.

“The loss of local television will be devastating to small communities. We are the backbone of Canadian culture and local culture.”

The broadcasters emphasized that they’re not asking consumers to pay more. Rather, they’re asking cable and satellite providers to share a small portion of their profits.