CRTC grants Canadian content spending relief for Corus, but says other asks must wait

Canada’s broadcasting regulator has granted Corus Entertainment Inc.’s request to ease some of its Canadian content spending requirements after the company warned of an increasingly dire financial situation.

The CRTC released a decision Monday approving Corus’ plea to lower its obligated spending on programs of national interest for its English-language stations to five per cent of revenue from 8.5 per cent. It also granted a request to extend a repayment deadline for under-expenditures of Canadian programming requirements.

The broadcaster asked the regulator to “urgently” make the changes last October, saying the changes would provide “much needed flexibility” amid programming and advertising uncertainty, as well as “severely constrained” finances.

“The commission finds that it would be appropriate and justified to approve Corus’ requests for regulatory relief … given Corus’ unique regulatory status and its particular financial situation,” the decision stated.

The CRTC said the emergency request was reasonable because it was tailored to Corus’ specific circumstances, noting its spending on programs of national interest is among the highest of all private broadcasters.

It added the risk of Corus exiting the Canadian broadcasting landscape “would greatly reduce the options Canadian viewers have for content,” calling Corus a vital source of news through its Global Television Network, along with being the largest provider of independent programming in Canada.

Last fall, Corus president and CEO Doug Murphy said the company was hit hard by advertising revenue declines during strikes by the Writer’s Guild of America and the Screen Actors Guild in the U.S. that affected its TV lineup. He also cited high inflation that has raised programming costs while reducing advertising demand.

Murphy applauded the CRTC’s decision on Monday.

“This is the most substantive move toward regulatory change that our company has seen in years,” he said in a statement.

“We are hopeful this is the first step toward long overdue broader changes to the decades-old regulatory regime. Time is of the essence for Corus and the industry.”

The CRTC clarified in its ruling that the overall amount Corus must spend on Canadian programming has not changed.

“However, the CRTC is granting Corus more flexibility to choose the type of Canadian programming it invests in, while ensuring continued support for news programming,” it said.

The extension of Corus’ repayment deadline for under-expenditures of Canadian programming requirements would also help it navigate revenue volatility, the broadcaster previously said.

Under rules set by the CRTC, Corus has been able to underspend on Canadian programming in a given year by up to 10 per cent of the minimum requirements as long as it makes up the difference the following year. But that clause didn’t apply to final year of its licence term, which will expire August 2026.

The CRTC’s approval of its request means Corus will now also be able carry forward under-expenditure amounts into its next licence term.

In its decision, the regulator pointed out Corus no longer benefits from flexibility given to broadcast distributors to fund production of local news content. That’s because Corus is not affiliated anymore with Shaw Communications Inc., which was purchased by Rogers Communications Inc. last year.

Meanwhile, the CRTC said requests from other broadcasters for regulatory relief, including those relating to local news and Canadian programming requirements, will be dealt with as part of its ongoing plan to modernize the Canadian broadcasting framework.

In a letter attached to the decision, which was addressed to executives from Corus, Rogers, Bell Canada, Quebecor Inc. and other stakeholders, the commission said it “acknowledges that the broadcasting landscape has changed significantly in recent years and that broadcasters are facing additional pressures to meet their respective obligations.”

“The commission considers it appropriate to incorporate the applications … into these upcoming proceedings,” said secretary-general Marc Morin.

“As a result, the commission is suspending these applications at this time and will consider them as part of the implementation of the amended Broadcasting Act.”

Among those applications was a filing by Bell Media last June that came the same day its parent company announced it was cutting 1,300 positions, shutting or selling nine radio stations and closing two foreign bureaus in the face of rising financial pressure.

Arguing some regulatory rules are based on outdated market realities, Bell asked the CRTC to drop requirements for spending on local news and reduce its obligation for Canadian content spending on English-language television stations.

In February, Bell cited a lack of progress on its request for regulatory relief when it announced it would slash 4,800 more positions, sell 45 additional radio stations, end multiple television newscasts and cut other programming.

Bell declined to comment on the CRTC’s decision Monday.

The CRTC’s three-phase plan to modernize national broadcasting regulations is in response to Bill C-11, the Online Streaming Act, which received royal assent in April 2023. The legislation is meant to update the Broadcasting Act to require digital platforms such as Netflix, YouTube and TikTok to contribute and promote Canadian content.

Following a three-week hearing last fall, the CRTC issued a decision, which took effect last month, requiring both traditional broadcasters and online streaming services to pay annual fees.

It remains in the second phase of its work, which is expected to last through 2026.

This report by The Canadian Press was first published May 13, 2024.

Companies in this story: (TSX:CJR.B)

Sammy Hudes, The Canadian Press