Monthly Archives: September 2017

| My articles, TV

How the CRTC screwed over community television to save local news

It’s a new dawn in local television. CTV Montreal has a new 5pm weekday newscast, City Montreal is preparing to launch evening news at 6pm and 11pm, and ICI is getting an infusion of cash thanks to OMNI’s successful bid for mandatory distribution at 12 cents per month per subscriber.

It’s a big enough change that I was asked to write about it for the Montreal Gazette. That story leads Saturday’s Culture section.

But while the new investments are great news for people who like local television (and, indirectly, people like me who like writing about it), there’s a big loser in this that isn’t getting discussed much: community television. The additional money going into local news is coming straight out of their pockets.

Let’s not talk TV

When the CRTC announced it was undertaking a long consultation process it called Let’s Talk TV, proponents of non-profit community television were excited about the prospect of finally bringing their issues to the forefront. A complaint from the independent group ICTV against Videotron’s community channel was in progress (the commission would later find that MAtv had failed to respect its licence conditions in terms of giving enough access to people from the community). And there was a growing opinion that community channels were not fulfilling their mandate.

The Canadian Association of Community Television Users and Stations and other groups filed complaints about other television providers that they felt were doing the same things to their community channels, ignoring their commitments to community access and using their funds to produce professional broadcasts and give side jobs to people affiliated with the company.

But the Let’s Talk TV process didn’t talk much about community television, and when it led to its first decisions in January 2015, the commission decided to kick the can down the road on community television, announcing it would begin a separate process to consider that. And that process would also include discussions of local news.

As expected, a review of the community television process was hijacked by discussions of local commercial television. People were more concerned about whether their local station would stay on the air or how long their local newscast would be than how their local Rogers TV or Shaw TV would be funded.

And the complaints about community channels still haven’t been properly evaluated, years later. That will happen at a hearing on the renewals of their licences, scheduled for October.

Provider TV

Let’s step back a bit and look at what community television is and has become in Canada.

Since 1971, the CRTC has required cable television providers to support community channels. Back then, television equipment was very expensive, very large and hard to obtain and operate. Community access was the only way many people could see themselves on television and communicate with the public through video. Cable companies would set up studios at their head ends and let people from the community broadcast on a special channel they set up.

Since the turn of the millennium, the situation has changed. Getting access to equipment isn’t the biggest problem — as the CRTC says, “many Canadians now carry an HD camera in their pocket in the form of their smartphone” — editing can be done on a home computer, and distribution is much easier thanks to YouTube and other free online services.

Instead, over the past decade, the issue has been more about money.

All cable television providers are required to spend 5% of their gross revenues on Canadian programming, but most are allowed to redirect some of that money to a community channel rather than simply hand it over to a fund like the Canada Media Fund. Most large terrestrial television providers do this because it allows them to keep control of that money, create a service that’s seen to do a public good, and provide added value for subscribers.

Critics might point out some other benefits, such as billing yourself for Internet access and providing side jobs for your employees. (The CRTC limits such overhead costs, but there isn’t a bright line that says you can’t be a supplier to your own community channel.)

Since 1991, the amount of money allowed to be redirected to community channels has been capped at 2% of gross revenues. Though there were many exceptions (small cable companies could devote the full 5% to a community channel, and companies that offered community channels in each official language could devote 2% to each one).

It might not seem like much, but when you have more than a million subscribers paying more than $50 a month, that’s a million dollars a month right there going to community TV.

As budgets for community TV grew, and technology advanced, they started to get more ambitious in terms of programming. Some even started broadcasting professional sports until the CRTC put a stop to that. (The ban doesn’t affect junior sports, and many junior hockey league matches are still broadcast on community channels.)

Community television is in an odd place because on the one hand it’s supposed to be volunteer-driven but on the other hand it’s required to spend money on programming. The pressure has always been there to keep the cable-access stuff to a minimum so more popular professional-looking programming can entice people to buy or keep their cable subscriptions.

And there was the added benefit of using community channel money to benefit related productions and personalities. Bell’s TV1 had shows linked to The Amazing Race Canada, the Much Music Video Awards, the Montreal Canadiens, The Social and eTalk. Videotron’s MAtv had side projects for such Quebecor personalities as Sophie Durocher, Louise Deschâtelets and Dominic Arpin.

This is a big part of the reason why CACTUS and others wanted community television taken out of the hands of big cable providers and put into the hands of non-profit community groups. But the CRTC has repeatedly resisted that effort, believing that the cable companies have the best resources available to provide high-quality community programming on a sustainable basis.

“Flexibility”

In 2010, the commission decided to freeze contributions to community channels. It found that the amount of money going to community television had almost doubled in a decade, and “although the Commission acknowledges that various metrics can be used to evaluate the success of community channels, it nonetheless considers that overall viewing to community channels remains modest relative to the growth in contributions to this sector.” Rather than cut the funding down, though, it decided to freeze it. Existing television providers would be capped at their 2010 levels until those dropped to 1.5% of revenues, and then they would stay at 1.5%.

In June 2016, the CRTC released its new policy on local and community television. There, it cut the contribution from 2% to 1.5%.

But the bigger blow was their decision to allow distributors the “flexibility” to redirect funds from community channels to their affiliated local stations to spend on local programming. For Canada’s five largest cities (Toronto, Montreal, Vancouver, Calgary and Edmonton), that redirection could be 100%, since the CRTC believed that people in those areas “have access to many media sources on television and radio, as well as online and in print, that provide community reflection.” For smaller areas, at least 50% of that money would still need to be spent on community television.

By the CRTC’s estimate, $65 million a year could be redirected from community channels to local stations owned by the major vertically integrated companies.

But what about independent stations? Where do they get additional money?

To help out most of them, there was already a fund called the Small Market Local Production Fund, funded by Canada’s satellite TV providers. The CRTC transformed that into the Independent Local News Fund, adjusted its admission criteria to include larger-market stations like CHCH in Hamilton and the V stations in Quebec and Montreal (while excluding small-market stations owned by the media giants), and required cable companies to contribute into the fund. Everyone kicks in 0.3% of revenues to support independent stations.

So in the end, all independent stations get extra money from this fund, and non-independent stations get funded through TV providers who share the same owner.

News pro quo

In exchange for the extra money, there were new requirements for local stations:

  • In addition to the amount of local programming they have to air each week (still set at 14 hours for major-market stations and 7 hours for smaller ones, with some exceptions), they must air a certain amount of locally reflective news programming as well — six hours in large markets, three in smaller ones.
  • There’s also a financial requirement for investment in local news: 11% of gross revenues for local television stations must be devoted to locally reflective news. (This number, proposed by the three English networks, is based on previous spending on local news.)

For community stations, even though they got less money, there were stricter regulations imposed to ensure that the money they did get was spent correctly:

  • Starting this year, cable companies must spend 60% of their community channel allocations on direct programming expenses. That rises in increments and reaches 75% after 2020.
  • Diverse citizen advisory committees are required in Canada’s five largest markets.
  • Rules on what qualifies as access programming have been tightened to stress that the community member that initiates a project must have creative control, and “is neither employed by a (TV provider) nor a media professional who is known to the public or who already has access to the broadcasting system.” They also can’t profit from the show (by turning it into a de facto infomercial for their business, for example).

The changes took effect on Sept. 1 after being formally approved as amendments to the regulations and enshrined in TV stations’ conditions of licence.

But most companies didn’t wait that long to make major changes:

  • Rogers closed some Rogers TV community stations and cut back at others in the greater Toronto area.
  • Shaw closed Shaw TV in Vancouver, Calgary and Edmonton, eliminating 70 positions and sending $10 million to Global TV stations.
  • Videotron cut the budget of MAtv by 25%, reflecting the drop of the maximum deduction from 2% to 1.5%. (There hasn’t been an announcement of any redirection of funds to TVA stations.) The cuts meant the cancellation of Montreal Billboard, a weekly series featuring interviews with local community groups. MAtv director Steve Desgagné told me the decision to cut that program was strictly budgetary.
  • Bell made serious cuts at its TV1 community channels, which operate in Toronto, Ottawa, Montreal and Quebec City. It declined to provide specifics when I asked.

The result

It’s hard to evaluate the impact on community television by looking at programming, because much of that programming is short-term projects. But you can expect less programming, and especially less of the non-access local programming produced directly by the cable companies, particularly in the larger markets, as a result of these changes.

On the TV side, Bell’s CTV and Rogers’s City have both announced new expansions of local news, both to make use of these new funds and to meet the new locally reflective news requirements. Global has been non-specific about how it’s using the additional money.

What definitely won’t change is the strongly held belief among supporters of community television that cable access needs to be less cable and more access.

| TV

Sportsnet Central Montreal reborn as Montreal Sports Weekly?

Montreal Sports Weekly on ICI.

I had two things waiting on my PVR this morning: A notification that future episodes of Sportsnet Central Montreal have been deleted from the City Montreal schedule, and a recording of Montreal Sports Weekly, a show I happened to notice on the ICI Television schedule as I was looking for information about its new arrangement with OMNI.

You can imagine my surprise when I hit play.

Montreal Sports Weekly is a half-hour local sports panel discussion show hosted by Elias Makos with local journalists sitting in high chairs in the City Montreal studio.

Sounds kind of familiar.

Makos hasn’t said anything publicly about this show, and his panelists — SN Central Montreal regulars Jeremy Filosa and Sean Farrell — haven’t talked about it either, which seems odd, so I’m not entirely sure what the deal is (the credits say only “COPYRIGHT 2017”). It could mean an announcement is coming, or it could mean that this is just a pilot or something and no one wants to get anyone’s hopes up.

Even the description of the show on the electronic program guide — “takes audiences beyond the game highlights for an in-depth look at the city’s professional and amateur teams, along with athlete profiles and feature stories” — is identical to the one first announced for Montreal Connected in 2013, with the exception that it’s described as an “English-language program” for clarity.

ICI’s business model involves working with independent producers who buy airtime and create shows that they can sell their own advertising for.

The first airing at 9am Saturday featured the same public service announcements and ICI house ads that generally fill the airtime. If this is really a project with a future, the show is going to need sponsors if it’s going to survive. So if you were upset that Sportsnet Central Montreal was cancelled, now is the time to get people to start advertising and supporting this.

This isn’t the first time someone has tried an English local Montreal sports talk show on ICI. Adam Reid had a show called Reid Between the Lines, an episode of which can be seen here. He’s since moved on to The Lineup, a sports game show on WatchMojo, which features some local media celebrities.

I’ll update this as I get more information about this show, assuming it doesn’t disappear as mysteriously and suddenly as it appeared.

Montreal Sports Weekly airs Saturdays at 9am and 6pm, Mondays at 2:30pm, Tuesdays at 11am, Wednesdays at 4pm, and Thursdays at 3pm and 9pm on ICI.

| Radio

TTP Media says it’s unaffected by partner’s bankruptcy

From left: Paul Tietolman, Nicolas Tétrault and Rajiv Pancholy, partners in 7954689 Canada Inc., aka Tietolman-Tétrault-Pancholy Media

Nicolas Tétrault, one of three equal partners in 7954689 Canada Inc., doing business as TTP Media, declared personal bankruptcy last year, but he and company president Rajiv Pancholy insist that has no impact whatsoever on the company that owns the licenses of two AM radio stations about to launch in Montreal.

The two stations are on the air, broadcasting music (the English one at 600 just recently exited its on-air testing phase). They expect to launch some time before the end of 2017.

Because it has yet to begin operations, the company has not paid out any dividends or salary to its partners, Pancholy said.

And in any case, Tétrault said his stake in the company is protected from his creditors because he holds them through a family trust.

The trust

When it was formed in preparation of a CRTC application, 7954689 Canada Inc. had three shareholders, each with 1,000 shares. Those three shareholders were each companies entirely owned and managed by the three partners — Tétrault, Pancholy and Paul Tietolman. It’s not unusual for various legal and fiscal reasons to have an ownership structure like this, and it’s no problem for the CRTC either, just a bit more paperwork because it needs to go up the chain and determine who has effective control of the licensee.

But in 2014, Tétrault applied to the commission for a change in ownership, to sell all his shares in his company, 9225-8318 Québec Inc., to a family trust, Fiducie Familiale NT, for $100. This transaction, he told the CRTC, did not affect the effective control of TTP Media, because Tétrault is the principal trustee of the trust. The agreement of sale, filed with the commission, states that Tétrault has the power to act alone on the trust’s behalf, even though there was another trustee, Karim Dalati.

Tétrault confirms in his brief to the commission that he has 100% control over the trust. (Dalati, a fellow real estate broker, is listed as a second trustee strictly for legal reasons because Tétrault is also a beneficiary of the trust.) Tétrault said he filed the application on the advice of his lawyers.

The beneficiaries of the trust are listed as Tétrault, his wife, his father, the estate of his late mother, his sister, any of his children or grandchildren (he has two young children) and Pancholy. (Pancholy denied being a beneficiary, telling me he’s actually a trustee.)

Details about the trust itself (under what rules it can pay out benefits to beneficiaries, for example) were either not filed with the commission or not added to the public file.

The bankruptcy

On Feb. 17, 2016, Tétrault filed for personal bankruptcy. Two days later, bankruptcy trustee Litwin Boyadjian Inc. sent a notice to creditors proposing a settlement on about $2.4 million in unsecured debt. Tétrault proposed to pay $200,000 over five years, which would give creditors eight cents on the dollar. The alternative, the proposal states, would be a bankruptcy in which creditors would get an estimated 1.8 cents on the dollar.

At a meeting on March 9, the creditors rejected the offer. The Canada Revenue Agency, which together with Revenu Québec hold 70% of Tétrault’s unsecured debt, is leading the court battle over his assets.

The report of the bankruptcy trustee gives the reason for the bankruptcy as follows:

The debtor has accumulated debts, mostly resulting by the loss of an important account receivable, excessive tax assessments and the bankruptcy of his business in 2014.

The Canada Revenue Agency has been trying to get Tétrault to answer several questions about his assets and debts, including a bank account in the Cayman Islands and an investment that it estimates at between $500,000 and $700,000 in TTP Media. It says in court filings that Tétrault refused to answer those questions. It will likely be up to a court to clear all this up. The case had its last court date in March and no further one is listed.

Effective control

When I contacted him about this story, Tétrault insisted there was no story. Because his stake in TTP Media is held through his family trust, it’s protected, he said. Pancholy said the same. When I asked for further information, Tétrault suggested I talk to an accountant and abruptly ended the conversation.

So does the trust protect his stake in this company? Well, it depends.

I’ll preface this by saying I’m neither an accountant nor a lawyer, and my experience in bankruptcy law is fairly minimal. But experts on the matter, such as this one from Fasken Martineau, say that the protection in a trust comes from the structure of the trust. If you’re a beneficiary of a trust and you file for bankruptcy, your creditors can only get as much power as you have. If the trust doesn’t give you that power, your creditors can’t take it from you. So an asset protection trust should ensure that someone else that you don’t control acts as a trustee or has veto power. And bankruptcy law explicitly states that assets held in trust for someone else can’t be seized by creditors. So certainly anything held in trust for the other beneficiaries is protected.

I don’t know exactly how Fiducie Familiale NT is controlled and what the terms of the benefits are, but Tétrault has already told the CRTC that he is 100% in control of the trust.

The exercise may more academic than anything. Licensees cannot change effective control without CRTC pre-approval, for one. And TTP Media has no real value, its assets being paid for entirely out of its startup debt. Besides, Tétrault is only a minority shareholder in TTP Media.

But the whole process is undoubtedly difficult for Tétrault. As a result of the bankruptcy case, the professional order of real estate brokers restricted his licence in July, requiring him to be supervised.

CJMS

This wasn’t the first case before the OACIQ involving Tétrault. Another one also had connections to his radio venture. In 2015, the body found Tétrault guilty of violating rules governing real estate brokers because he represented the owner of land that hosted the antenna for CJMS 1040 AM while at the same time being a party interested in buying it.

Tétrault disclosed the conflict of interest to his client, but the tribunal found that this wasn’t good enough, particularly in light of the fact that he appeared to make no effort to find other buyers. It said he should have removed himself as the broker for the seller in the case. Tétrault’s licence was suspended for 30 days as a result of this.

TTP Media’s original application to the CRTC for stations at 690 and 940 AM proposed they transmit from the CJMS site in St-Constant. When TTP Media lost the 690 application and had to settle for 600 instead, it changed its plan to operate the stations from the former CINW/CINF site in nearby Kahnawake.

A separate legal case between the land owner, André Turcot, and Tétrault related to the same deal was decided against Turcot, who apparently believed he had settled a debt problem to another lender and then didn’t show up in court to defend against a suit by that lender and later tried to get a default judgment overturned. That case set the value of the real estate transaction at $1.4 million, but says Tétrault never paid the $30,000 required once the purchase deal was signed.

I hope for the sake of Tétrault, his family and the radio stations he and his partners are launching that he gets back on his feet and finds a solution to his debt problem.

Pancholy, at least, is not concerned. If he had any doubts about the viability of the radio station, he wouldn’t be carrying it on his shoulders, he told me.

| Canadiens, Radio

TSN 690 to broadcast some Laval Rocket games

TSN Radio 690 has become the official radio broadcaster of the Laval Rocket, the Montreal Canadiens’ American Hockey League farm team, which is moving to the new Place Bell starting this season.

Okay, so that’s not so impressive, since there aren’t exactly a lot of other English-language sports talk stations desperate for the rights.

But this means TSN 690 will be broadcasting some Laval Rockets games on the air. Currently the plan is to broadcast Friday home games.

Sean Campbell has been named play-by-play man for these games. Mike Kelly, who has experience at TSN, NHL Network and Leafs TV, will do colour commentary.

The broadcasts will start with the Oct. 6 inaugural game against the Belleville Senators, and will likely end with the final home game on April 13 against the Toronto Marlies. The following matches are tentatively scheduled for TSN 690 broadcast, but that can change:

  1. Friday Oct. 6 @ 7:30pm vs Belleville
  2. Friday Oct. 13 @ 7:30pm vs Binghamton
  3. Friday Nov. 17 @ 7:30pm vs Lehigh Valley
  4. Friday Nov. 24 @ 7:30pm vs Utica
  5. Friday Dec. 8 @ 7:30pm vs Toronto
  6. Friday Jan. 12 @ 7:30pm vs Hartford
  7. Friday Jan. 26 @ 7:30pm vs Manitoba
  8. Friday Feb. 16 @ 7:30pm vs Hershey
  9. Friday March 9 @ 7:30pm vs Belleville
  10. Friday April 6 @ 7:30pm vs Springfield
  11. Friday April 13 @ 7:30pm vs Toronto

If TSN sticks to that, it’ll represent 11 of 76 regular-season games, or 14%, and 11 of 38 home games, or 29%.

Playoff games are obviously a possibility, but at least for this season might be more of a theoretical thing the way the Canadiens’ farm team has been playing lately.

| Media

Media News Digest: Sportsnet richer than TSN, Evan Solomon goes national, Gazette and Globe cut columns

News about news

At the CRTC

  • It’s Sept. 1, which means a lot of new licences take effect today, including those of TV services owned by Bell, Rogers, Corus, Quebecor and V. Also starting today, OMNI starts charging a mandatory 12 cents a month to all TV subscribers in Canada.
  • The commission has finally released financial details of specialty (now referred to as discretionary) channels for the year ending Aug. 31, 2016. Among the highlights:
    • Sportsnet saw a huge nine-figure jump in ad revenue, and made $93.6 million in profit in 2015-16, making it the most profitable television channel in Canada. Add in Sportsnet One ($44.8 million), Sportsnet 360 ($1.2 million) and Sportsnet World ($2.7 million) and the Sportsnet channels had $142.3 million in profit in one year. This is the first year that Sportsnet (just the regional channels) surpasses TSN in total revenue, total expenses and total profit. But TSN still has slightly more subscribers and slightly more revenue from subscriber fees.
    • The acquisition of national NHL rights meant a huge change for TVA Sports, causing its subscriber revenue to quadruple in a year. But its programming expenses also quadrupled, and it went from losing $20 million in the year before the rights change to losing $40 million the year after. Reducing expenses has allowed it to recover slightly in 2016.
    • Early numbers for Viceland Canada don’t tell us much. The channel was rebranded from Bio halfway through the 2015-16 year, and was on free preview for a while.
    • FXX Canada, the little sister to FX Canada, has squeaked into the black in its third year.
    • Numbers for G4 Canada show a dramatic 87% drop in the number of subscribers in 2015-16, pushing it into the red despite spending $0 on Canadian programming. This explains why Rogers has decided to shut down the channel, which no longer exists as of today.
    • RDS Info is continuing to bleed money, with revenue covering only about half of expenses. Profits from RDS more than make up for that, though.
    • Zombie channel Book Television, which has zero staff, zero original programming and little worth watching, still has more than 2 million subscribers and made $1.28 million in profit that year.
  • The commission has renewed the licence of CIRA-FM (Radio Ville-Marie) in Montreal and its retransmitters. The five-year renewal reflects some compliance issues, including appeals for donations that said without money the station could cease to exist — CRTC policy prohibits such threats.
  • With licences set to expire, the CRTC has given itself an extension until Dec. 31 to process the renewals of several radio stations, including CHXX-FM (Pop 100.9) in Donnacona, Quebec, near Quebec City. It also gave itself another year for CIBL-FM 101.5 Montreal.

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