Remission Order in Respect of Part II Licence Fees Paid or Payable Under the Broadcasting Licence Fee Regulations, 1997: SI/2020-77
Canada Gazette, Part II, Volume 154, Number 26
SI/2020-77 December 23, 2020
FINANCIAL ADMINISTRATION ACT
Remission Order in Respect of Part II Licence Fees Paid or Payable Under the Broadcasting Licence Fee Regulations, 1997
P.C. 2020-1060 December 14, 2020
Her Excellency the Governor General in Council, considering that it is in the public interest to do so, on the recommendation of the Minister of Canadian Heritage and the Treasury Board, pursuant to subsection 23(2.1) footnote a of the Financial Administration Act footnote b, makes the annexed Remission Order in Respect of Part II Licence Fees Paid or Payable Under the Broadcasting Licence Fee Regulations, 1997.
1 Subject to section 2, remission is granted to any person who is a licensee as defined in section 2 of the Radio Regulations, 1986, section 2 of the Television Broadcasting Regulations, 1987 or section 1 of the Discretionary Services Regulations of an amount equal to the licence fees paid or payable under paragraph 3(b) of the Broadcasting Licence Fee Regulations, 1997, including any interest on those fees, for the period beginning on April 1, 2020 and ending on March 31, 2021.
2 Remission is granted on the condition that the licensee referred to in section 1
- (a) provides an attestation to the Canadian Radio-television and Telecommunications Commission, on or before January 31, 2021, that the coronavirus disease 2019 (COVID-19) pandemic has had a significant financial impact causing an estimated reduction of 25% or more in revenues related to the broadcasting undertaking;
- (b) continues to operate the broadcasting undertaking for at least two years after the day on which the remission is granted; and
- (c) complies with the requirements under the Broadcasting Act and the conditions of their licence, in respect of the exhibition of Canadian content, for at least two years after the day on which the remission is granted.
(This note is not part of the Order.)
Considering that it is in the public interest to do so, that Her Excellency the Governor General in Council remit the Part II licence fees paid or payable by licensees of television stations, radio stations and discretionary television services under paragraph 3(b) of the Broadcasting Licence Fee Regulations, 1997, including any interest accrued on overdue accounts as a result, in respect of the fiscal year 2020–2021, and that the remission be conditional upon the following:
- i. an attestation by licensees, prior to 31 January 2021, that their organization has been negatively impacted by COVID-19, which has resulted in financial hardship to it and to its operations, and therefore in the need of government support, and that they can demonstrate a projected negative financial impact of at least 25% due to the COVID-19 pandemic;
- ii. the maintenance in operation of the broadcasting undertaking over a period of two years after the remission; and
- iii. the maintenance of compliance with their obligations regarding exhibition of Canadian content over a period of two years after the remission.
The objective is to provide financial relief for television stations, radio stations and discretionary television services (i.e. television services accessible via subscription) who meet the required conditions by allowing the Canadian Radio-Television and Telecommunications Commission (CRTC) to remit their Part II licence fees, including any interest accrued on overdue accounts, in respect of the fiscal year 2020–2021,subject to certain conditions. This would allow television stations, radio stations and discretionary television services to retain these fees to help them recover from the reductions to advertising in Canadian media as a result of the COVID-19 pandemic.
The broadcasting industry underpins a healthy democracy and vibrant Canadian culture, and becomes even more crucial during moments of crisis and upheaval, such as the COVID-19 pandemic. In such times, many Canadians turn to television and radio to obtain well-sourced and factual information relevant to their community, including local news. Furthermore, the broadcasting sector plays a vital role in funding Canadian cultural content, and in making this content available. The broadcasting industry is already impacted by the continued migration of advertising revenues towards the major online platforms. This long-term shift has been compounded by the rapid and drastic reductions to advertising in Canadian media as a result of the COVID-19 crisis.
It is difficult to estimate the total amount of local and national advertising revenues that have been and will continue to be lost by Canadian broadcasters as a result of the COVID-19 pandemic. In August 2020, the Canadian Association of Broadcasters released a report prepared by Communications Management Inc. that examined the combined long-term structural trends and the sudden impact of the COVID-19 crisis on television and radio advertising revenues.
The report estimated that the impacts of the pandemic will lead to a cumulative $1 billion decrease in advertising revenues and approximately 200 stations closing over the next three years (2020–2022). This would affect independent stations first and foremost, but could also affect stations operated by the large broadcasters (Bell, Corus, Québecor and Rogers) in smaller and underserved communities, where they are often the sole source of local news.
Broadcasting licence fees, pursuant to the Broadcasting Fee Regulations, are charged annually to all licensees of the broadcasting industry, except those excluded by the Broadcasting Fee Regulations and those whose broadcasting revenues do not exceed the exemption levels. Broadcasting licence fees have two components: a Part I licence fee payable 30 days after the date of the invoice from the CRTC to recover the CRTC’s broadcasting regulatory costs, and a Part II licence fee payable on or before December first in each year, to recover part of the Government of Canada’s substantial annual investment in the Canadian broadcasting system (such as supporting production through the Canada Media Fund and Telefilm), and is accrued to the Government’s Consolidated Revenue Fund (CRF).
Part II broadcasting licence fees are charged to licensees who hold a licence of broadcasting distribution undertakings (multichannel subscription television providers, such as Bell TV, Rogers Cable, Shaw Direct, Vidéotron, etc.), as well as to television and radio stations whose revenues are higher than the exemption amount specified in the Broadcasting Fee Regulations.
As set out in the Broadcasting Act, Part II licence fees constitute a debt due to Her Majesty in right of Canada. The fees fall within the meaning of “other debt” as defined in the Financial Administration Act, which sets out that the Governor in Council may, on the recommendation of the Treasury Board, remit such debt where its collection is unreasonable or unjust, or that it is otherwise in the public interest to remit the debt.
In March 2020, approximately $30 million of Part I broadcasting licence fees were waived in a similar fashion, which had a positive impact on broadcasters early in the COVID-19 pandemic. Part I licence fees are used to fund the CRTC’s broadcasting activities. However, as broadcasters’ advertising revenues have yet to recover, the broadcasters are in need of further financial help.
The relief measure is conditional upon the following:
- i. Broadcasters will need to attest, prior to 31 January 2021, that their organization has been negatively impacted by COVID-19, which has resulted in financial hardship to it and to its operations, and therefore in the need for government support, and that they can demonstrate a projected negative financial impact of at least 25% due to the COVID-19 pandemic;
- ii. Broadcasters will be required to maintain the operation of their radio and television services over a period of two years after the remission; and
- iii. Broadcasters will be required to maintain compliance with their obligations regarding exhibition of Canadian content as per their conditions of licence or the CRTC Regulations over a period of two years after the remission.
The first condition will ensure that only broadcasters who have been meaningfully impacted by the COVID-19 pandemic and require support in the form of a fee remission will benefit from this measure. The second and third conditions will ensure that broadcasters who receive support from this measure use it to continue operations and continue offering Canadian content as required by the CRTC in their conditions of licence, CRTC regulations and decisions.
Failure to fulfill either condition would void the remission, and fees and accrued interest would then be recovered as if there had been no remission. Monitoring of compliance with these conditions will be made by the CRTC as part of their regular monitoring of broadcasting services’ operations and compliance with regulatory obligations. It is expected that meeting the conditions will not create burdens for broadcasters beyond what is already required of them under CRTC conditions of licence and regulations.
The relief measure would provide direct short-term support to broadcasters impacted by the reduction of advertisement revenues due to COVID-19. It is a one-time support measure offered to broadcasters to allow them to weather the unprecedented pressures on their advertising revenues caused by the COVID-19 pandemic, and indirectly providing support for costly and nationally important functions that they perform, such as the provision of local news and the funding of Canadian cultural content. Cable and satellite television distributors would be excluded from this initiative. While their revenues are generally following a downward trend as a result of audience migration to online programming sources, television distributors have not been severely impacted by the COVID-19 pandemic, as their revenues are not dependent on advertising. Remitting the Part II fees for the 2020–2021 year will not affect the CRTC’s ability to collect such fees in the future.
Revenues collected from the payment of Part II licence fees by broadcasters go into the CRF. By not collecting the revenues, the Government would therefore forego up to $50 million, including any interest accrued.
Thomas Owen Ripley
Broadcasting, Copyright and Creative Marketplace
Department of Canadian Heritage