“TV tax” rumble continues: CRTC battle spills onto the airwaves

The Carillon, Vol. 52, Issue 10 | Nov. 12 – 18, 2010

The commercial looks like this: a clean-cut man tells people on the street that television networks want to tax Canadians in order to fund a bailout. What do they think? Naturally, he is met with anger and disbelief. The people are outraged! One woman calls it “downright sneaky.” At the end, the man urges us to stop the TV tax and visit stopthetvtax.ca.

This campaign has been launched by cable and satellite providers, including Bell, Cogeco, Shaw, Telus, and Rogers, in response to a campaign called “Local TV Matters” by broadcasters, including CTV, CBC, and Global. Both campaigns refer to an issue that is currently before the Canadian Radio–television Telecommunications Commission (CRTC), but in very different ways – while the latter calmly talks about fair payment for services, the former angrily takes the side of consumers against “taxes and bailouts.”

However, the issue before the CRTC is one of payment parity rather than taxation. The CRTC is considering allowing negotiations between broadcasters and providers to establish compensation for the use of local television signals. Cable and satellite providers (such as Rogers) already pay American stations for their signals, but don’t pay Canadian networks. The broadcasters want the providers to pay to use local TV signals, but the providers have no intention of doing that without a fight.

Contrary to very modest estimates on the TV Tax website, revenues from Canada’s broadcasting providers in 2008 totaled roughly $14 billion, an increase of 7.3 per cent over the previous year. There is little indication that providers are suffering excessively from the recession. In fact, this past quarter, Rogers Cable saw a 7 per cent advance in its core cable, Internet, and home phone revenue to $773 million, while other providers have also reported strong growth.

On the other hand, networks are suffering. Local TV revenues were almost always financially strained, but made up for it during prime time; however, with the advent of 300-plus specialty channels, that’s no longer the case. The networks argue that if the providers pay for the signals, then local TV will become viable once again. This is how the issue has been framed in the “Local TV Matters” advertisements, although this position is disputed by providers, who argue that since the signals have always been free over the air and should remain so.

Because of the providers’ massive returns, the CRTC says that there is no reason for broadcast companies to pass the fee onto their customers, and therefore claims that the fees would constitute a tax are misleading. John Douglas, CanWest’s VP Public Affairs, argues that the providers are attempting to brand the fee as a tax on consumers so that they may ultimately justify passing it down to consumer bills. “I don’t think any Canadian is going to be fooled by this idea of a tax,” he said. Douglas contends that the providers have been disingenuous for years, as cable bills have increased by four times the rate of inflation. Douglas also points out that since the issue was before the CRTC prior to the recession, it’s inaccurate to call it a bailout.

Unfortunately, representatives from providers, such as Rogers and Bell, were unavailable for comment.

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