ARCHIVED - Broadcasting Commission Letter Addressed to Ann Mainville-Neeson (TELUS Communications Inc.)
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Ottawa, 30 July 2014
VIA EMAIL: ann.mainville-neeson@telus.com
Ms. Ann Mainville-Neeson
Vice President
Broadcast Policy and Regulatory Affairs
TELUS Communications Inc.
10020 – 100 Street, Floor 30
Edmonton, Alberta T5J 0N5
Subject: Shortfalls relating to Canadian programming contributions
Dear Ms. Mainville-Neeson:
As you are aware, the Commission recently conducted an audit of TELUS Communications Inc.’s (TELUS) annual returns for the broadcast years 2007-2008 to 2012-2013. During that audit, Commission staff identified a number of areas of apparent non-compliance with the contribution requirements under sections 34 and 35 of the Broadcasting Distribution Regulations (the Regulations) due to issues with your calculations. You were notified of this apparent non-compliance by letter dated 4 April 2014 and responded by letter dated 5 May 2014.
This letter is to inform you that following a Commission determination, the Commission finds TELUS in non-compliance with the contribution requirements under sections 34 and 35 of the Regulationsfor the 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012 and 2012-2013 broadcast years. In particular, the following issues and shortfalls have been identified:
- Incorrect prior year revenue base used to calculate Canadian programming contribution – shortfall $20,017,214 (Canadian programming);
- Accrual of contribution towards local expression – shortfall $1,015,850 (Canadian programming);
- Revenue base used for calculation of contributions derived from Video-on-demand (VOD) associated revenues – shortfalls of $991,088 (Canadian programming) and $297,327 (Local Programming Improvement Fund (LPIF));
- Carry-forward of under-contributions to local expression – shortfall $33,168 (Canadian programming).
The total shortfall relating to Canadian programming requirements is $22,057,320. The Commission directs TELUS to pay this amount to the Canada Media Fund (CMF) as follows:
- A minimum of 20% of this total shortfall ($4,411,464) must be paid within 90 days of the date of this letter;
- Any remaining balance must be paid in equal monthly installments over the 2014-2015 and 2015-2016 broadcast years with the final payment being due in August 2016.
The shortfall relating to the LPIF is $297,327. The Commission directs TELUS to pay this amount to the LPIF Fund administrator by 31 August 2014.
Proof of payment for the LPIF amount due by 31 August 2014, must be filed with the Commission within 60 days of the date of this letter. Proof of payment for the Canadian programming amount due within 90 days of the date of this letter must be filed with the Commission within 120 days of the date of this letter. Proof of payment for the monthly amounts required to be spent in the 2014-2015 and 2015-2016 broadcast years must be filed on an annual basis by 30 September following the end of each broadcast year. The annual return requirements remain in effect and supporting documentation for the required yearly contributions must be filed with the Commission by 30 November of each year.
The Commission reminds TELUS that contributions to Canadian programming are to be made on the basis of the current year’s gross revenues derived from broadcasting activities. In calculating the monthly contribution, TELUS is to use the prior year’s revenues but the total amount must be trued up to reflect the current year’s revenues by 31 December of the subsequent broadcast year.
The Commission also reminds TELUS that local expression contributions may only be claimed in the broadcast year in which they are incurred (spent) and any amounts budgeted but not spent in the year cannot be carried-forward and used in future years.
The Commission notes that contributions to Canadian programming and the LPIF for the 2013-2014 broadcast year ending 31 August 2014, must take into account the Commission determinations identified above in regards to the calculation of the contribution requirements under the Regulations.
Sincerely,
(Original signed by Helen McIntosh for)
John Traversy
Secretary General
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