Madam Chair and members of the committee, thank you for inviting us to appear today.
My name is Ian Morrison. With me is Peter Miller, who has broad expertise in Canadian media issues, including local television, which, as you know, is synonymous with local TV news.
Television is the most important source of local news in Canada. When a December 2015 survey by ThinkTV asked Canadian adults which medium is their primary source of local news, 36% chose television, eclipsing newspapers at 23%, radio at 20%, and the Internet at 18%.
Peter collaborated with Nordicity to analyze the economic impact of the CRTC's Let's Talk TV policies in a major research report entitled “Canadian Television 2020: Technological and Regulatory Impacts”, released earlier this year. Its key findings are that by 2020, some 15,130 media jobs will be lost, and there will be a $400-million drop in Canadian program expenditures—that's 18% of what now exists—and a $1.4 billion hit to Canada's GDP, all of this as the direct result of Let's Talk TV regulatory changes.
The CRTC has yet to release any economic assessment of the impact of Let's Talk TV, suggesting a lapse in evidence-based decision-making. This loss has nothing to do with technological change and will greatly harm the future viability of local television news. The research study's authors have advanced proposals to reduce the negative impact of the CRTC's decisions by as much as 75%. They say:This would not, in our view, require “turning back the clock” on all LTTV Decisions. It would merely require relatively minor “tweaking” that recognizes Canadians as broadcasting policy has always recognized them—not merely as consumers, but as creators and citizens too.
Compounding this hit, television stations in small and medium markets are particularly vulnerable to adverse economic trends, according to a second Nordicity-Miller study entitled “Near Term Prospects for Local TV in Canada”. That study concludes with the following: ...Canada’s local television heritage is at risk of major cutbacks and station closures, which could be avoided, deferred or minimized by the...[CRTC’s] contemplated reallocation of mandatory Broadcasting Distribution Undertaking (BDU) “local expression” contributions, if...[focused on] small [private] and medium market TV stations.
The near term prospects study projects that up to half of local stations in small and medium markets, where there is often no local TV alternative, will fade to black by 2020 in the absence of CRTC action. This would lead to an estimated 910 layoffs of journalists and others who work to put local news on the air.
The study also found that the most vulnerable stations are independently owned and in small markets such as—
Madam Chair, I won't read out the names of 35 Canadian cities here; they're in my remarks.
When large market local stations are included, the study projects job losses of 3,490.
As you know, local TV, especially news, is very popular with Canadians. A recent Nanos Research poll found that 92% agree that local news is valuable to them, and 90% agree that their federal member of Parliament should work to keep local broadcasting strong in their community.
What can be done to protect local television news?
First, there's tax policy.
Internet advertising is driving structural change, first in print and now in television, as spending has increased eightfold to $3.5 billion since 2006—that's more than a third of all Canadian advertising—yet federal policies to support local media have not changed since the 1990s.
The Income Tax Act should be updated to exclude tax deductibility for foreign-owned or -controlled Internet advertising platforms in addition to cross-border broadcasters and newspapers, as is the case now. Tax deductibility should be restricted to Canadian-owned Internet sites.
Australia has recently moved to require Netflix-like foreign program distributors to collect sales tax. Rogers, Shomi, and Bell's CraveTV collect sales tax from Canadian customers but not their direct competitor Netflix.
The Canadian film or video production tax credit supports most independently produced Canadian programming other than local programming. You should recommend amending the eligibility rules to permit support for local news programming produced by local broadcasters. And we recommend that you invite officials from the Department of Finance to appear to outline options to keep more Canadian ad spending and subscribers' money in Canada.