Following up on my blog post from earlier in the week and to try to correct some serious errors in the main stream media, I thought it would be worthwhile to capture some references to the origins of the CRTC’s tangible benefits program.
One story suggested that the purpose of the tangible benefits program is “a sort of tax, a percentage of the purchase price, toward the development of the entire system” designed “to help to offset the negative effect that the resulting industry consolidation has on our viewing and listening options.”
There was a CRTC public notice issued in 1992 that provides a good discussion of the origins of the concept of tangible benefits to be paid on the transfer of ownership or control of a broadcast undertaking. I recommend reading the “Background” section of Broadcasting PN CRTC 1992-42, if you have an interest.
That section refers back to a 1977 decision by the CRTC where it stated:
The transfer of control of a licensed broadcasting undertaking frequently results in additional financial obligations being imposed, directly or indirectly on the undertaking involved. In such circumstances the Commission must be fully satisfied, before granting approval, that such a transfer will not affect the ability of the licensee to maintain existing broadcasting services; that it will benefit the subscribers and the communities concerned; and that it is in the public interest.
The 1992 public notice resulted in a determination in 1993 with the kernel of the policy in force today. It is noteworthy that there is considerable latitude to the breadth of expenditures that are permitted:
Tangible benefits generally fall into three broad categories: operating expenditures, such as in the areas of additional staff or programming improvements; capital expenditures for technical improvements; and grants and contributions to Canadian talent or program development funds.
The Commission considers that publishing a comprehensive list of acceptable benefits would be limiting, as many benefits that are accepted are tied to the particular circumstances of a transaction or a market.
The applicability of capital improvements proposed for Northwestel territory (as described in my blog post) could have been inspired by a statement in the CRTC’s 1993 document:
The Commission notes with respect to cable that it will also accept as benefits certain “normal course” capital expenditures identified in subsection 18(5) of the Cable Television Regulations, 1986 in cases where the applicant waives its right to submit fee increase applications for these items…
There are clearly competitive concerns that come into play as I mentioned earlier in the week. But it was inappropriate to suggest that the proposal is an attempt by Bell to weasel out of its tangible benefits obligations.