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Public Notice
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Ottawa, 23 December 1992
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Public Notice CRTC 1992-89
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Increased Flexibility With Regard to Canadian Program Expenditures by Canadian Television Stations
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In Public Notice CRTC 1992-28 dated 8 April 1992, the Commission announced revisions to the formula regarding Canadian program expenditures by private, English-language television stations.
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The formula requires an annual minimum level of Canadian program expenditure, based on each station's financial performance as measured by its total advertising revenues in previous years.
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The revisions to the formula were introduced by the Commission following its consideration of various suggestions for modifications put forward by Global Communications Limited (Global) and by the Canadian Association of Broadcasters at the public hearing of Global's application for the licence renewal of CIII-TV in November 1991 (see Decision CRTC 92-220).
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The revisions gave licensees the flexibility to underspend with respect to Canadian programming in the 1991/92 broadcast year, and in any subsequent year of the licence term other than the final year, by an amount not greater than 5% of the minimum amount required to be spent on the basis of the formula for that year. However, the amount by which a licensee may underspend in any given year must be added to the amount required to be spent, by condition of licence or by expectation, in the following year.2
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As of the 1991/92 broadcast year, licensees who overspend were permitted to credit such over-expenditures in future years of the current licence term.
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Following the issuance of Public Notice CRTC 1992-28, the Commission received a request from Sunwapta Broadcasting Ltd., licensee of CFRN-TV Edmonton, that it be permitted to credit an overexpenditure occurring before the 1991/92 broadcast year towards its Canadian programming expenditure requirements in a later year or years of its licence term. In Decision CRTC 92-828 issued today, the Commission has approved a similar request by CFCF Inc., licensee of CFCF-TV Montréal, permitting it to claim retroactive credit with respect to an overexpenditure occurring in the 1989/90 broadcast year. The Commission approved a further request by CFCF Inc., allowing the licensee to make retroactive use of the 5% flexibility provision with respect to underspending that occurred prior to the 1991/92 broadcast year.
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The Commission is convinced that these requests for additional flexibility do not prejudice attainment of the policy objectives underlying the Canadian programming expenditure formula. It will therefore permit all licensees whose Canadian programming expenditures are governed by conditions of licence or by expectation to credit an overexpenditure occurring before the 1991/92 broadcast year towards their Canadian programming expenditure requirements in a subsequent year or years of the same licence term.
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Similarly, with respect to underspending on Canadian programming in any given year, the Commission will permit licensees to apply the 5% flexibility provision retroactively to the beginning of their current licence terms. Specifically, in year one and in any subsequent year of the licence term other than the final year, the Commission will permit a licensee to underspend on Canadian programming by an amount representing no more than 5% of the minimum amount otherwise established for that year by condition of licence or expectation. If a licensee utilizes this flexibility to underspend in a given year, the amount by which that licensee has underspent must be added to the amount required to be spent, by condition of licence or expectation, in the following year.
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In Decision CRTC 92-220 granting Global the renewal of its licence for CIII-TV, the Commission imposed a condition of licence regarding Canadian programming expenditures that permitted Global to base its expenditures on the two-year average change in advertising revenues, rather than the three-year averaging mechanism established in the conditions of licence applied to most other licensees. This measure was intended to enable the licensee to respond more quickly to declines in revenues.
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In Decision CRTC 92-828 of today's date, the Commission has offered CFCF Inc. the choice of either operating in accordance with the current condition of licence concerning Canadian programming expenditures which encompasses a three-year averaging mechanism, or of operating in accordance with a new condition of licence proposed by the Commission which would require it to meet its annual requirements for Canadian programming, calculated on the basis of year-to-year changes in advertising revenues. The Commission took into consideration the financial difficulties facing the licensee, in particular the sudden and precipitous drop of more than 10% in advertising revenues experienced by CFCF Inc. in the 1990/91 broadcast year. The Commission hereby announces that the option of calculating the annual required level of Canadian program expenditures on the basis of the year-to-year change in advertising revenues may, upon application prior to the expiry of the current term, be extended to other licensees in circumstances similar to those of CFCF Inc. (specifically, those licensees experiencing a 10% or greater drop in advertising revenues in a single year). Alternatively, such licensees may apply for licence amendments authorizing them to calculate their Canadian programming expenditures on the basis of the two-year average change in advertising revenues.
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The Commission emphasizes, however, that, whichever method of calculation is adopted, it must be applied throughout the entire licence term.
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As noted in Public Notice CRTC 1992-28, licensees are still required to spend on Canadian programming, over the full licence term, the sum of the minimum amounts required for each year of the licence term.
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The Commission is satisfied that this approach offers licensees flexibility without compromising achievement of the objectives of the Canadian program expenditure formula.
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Related documents: CRTC Public Notices 1989-27 dated 6 April 1989 and 1992-28 dated 8 April 1992.
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Allan J. Darling
Secretary General
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