Broadcasting Commission Letter addressed to Corus Entertainment

Ottawa, 13 June 2019

BY EMAIL

VIA MAIL: Karen.gifford@corusent.com                                                             

Ms. Karen Gifford
Senior Director, Government Relations and Compliance
Corus Entertainment
25 Dockside Drive
Toronto, Ontario, M5A 0B5

 

Re: Ineligibility of the allocation of funding to Corus Inner City Childhood Obesity Research Initiative (CICCORI) as part of TELETOON Canada’s tangible benefits package.

Madam,
           
In 2013, Corus Entertainment Inc. (Corus), through its subsidiary 8324441 Canada Inc. filed an application on behalf of TELETOON Canada Inc. (TELETOON Canada) for authority to effect a change of TELETOON Canada’s ownership from a company that was jointly controlled by Corus and Bell Media Inc. to Corus. This application was approved in Decision 2013-737 (the Decision).This transaction resulted in an overall tangible benefits package valued at $26.02 million.

In the Decision, the Commission noted that Corus had not provided details on how CICCORI would benefit the community served and/or the broadcasting system, and directed Corus to reallocate the $900,000 in proposed contributions to an initiative that benefits both linguistic markets, in proportion to the service’s historical Canadian Programming Expenditures (CPE) in each linguistic market. The Commission further specified in Appendix 1 to the Decision that such funding be reallocated to “production” and/or “script and concept development” initiatives proportionately in each linguistic market.

Corus began its tangible benefits contributions in the 2014-2015 broadcast year. It then submitted reports to the Commission on the spending for that year and for each subsequent year. According to the reports, Corus allocated $257,160, $128,580, and $128,580 in the 2014-2015, 2015-2016, and 2016-2017 broadcast years, respectively. Notably, correspondence from CICCORI (provided to the Commission by Corus) indicated it had received $394,249 from Corus, which amounts to a $120,071 shortfall in reported funding.

Corus was required to explain the contributions in the verification by the Commission of its annual report each year. Corus argued that the spending complied with the Commission’s determination in Decision 2013-737, and that the funding was being spent on script and concept development, proportionately, in both linguistic markets.

A letter dated 20 August 2018 from CICCORI, filed by Corus, contradicted these previous statements: it indicated that the required spending was not being contributed to script and concept development initiatives.

Commission’s decision and analysis

Despite the Commission’s clear rejection of this initiative in Decision 2013-737, and numerous subsequent requests by Commission staff for clarification, Corus did not choose to reallocate the funds to another eligible tangible benefits initiative, nor did it seek Commission permission to claim its contributions to CICCORI as eligible tangible benefits.

Moreover, the evidence filed by Corus indicates that the funding has largely been used to develop academic papers and other related activities, with only a small amount being devoted to activities that could be considered related to script and concept development, mainly in the form of the development of YouTube videos related to the CICCORI. In the French-language market, the funding appears to have been used to pay staff whose functions include coordinating the translation of research materials, and recruiting French-language families in both Montreal and Toronto for the program, among others.

The Commission therefore finds that the payments allocated to CICCORI were ineligible contributions for the purposes of the TELETOON Canada Inc. tangible benefits package, as per Broadcasting Decision 2013-737. The Commission therefore requires Corus to contribute the full value of the initiative as prescribed in the Decision, equating to $900,000 to the Canada Media Fund (CMF), which includes the amounts already contributed to CICCORI. These funds must be paid, in full, to the CMF before the end of the current term of the tangible benefit, i.e., 31 August, 2021. Acceptable proof of payment demonstrating receipt of the funds by the independent 3rd party must be filed on an annual basis and should be included with the annual returns and filed each year by November 30th of the year in question.

The Commission’s files will be updated and will reflect the information stipulated in this letter. All letters issued by the Commission are available, upon request by the public.

The Commission requires you to append this letter to your licence and notes that it will re-examine Corus’ compliance with this decision in the context of Corus’ next licence renewal.

Sincerely,

Original signed by

Claude Doucet
Secretary General

 

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