When broadcasting assets change hands, the CRTC assesses the transaction, at least in part on the basis of “how it will benefit the communication system from a social, economic and cultural perspective.”
In the case of the current hearing that is probing the proposed acquisition of Astral Media by Bell, the CRTC is testing:
- the concentration of ownership in the French- and English-language television and radio sectors
- [compliance with] the Commission’s various policies, including the diversity of voices, the common ownership policy for radio and television, and vertical integration
- the value of the transaction, and
- the proposed tangible benefits package as well as the intangible benefits.
The latter three bullets come together in that “tangible benefits” item. As I wrote in July, tangible benefits are effectively a euphemism for a “tax” on the value of the transaction, used to fund a public benefit, in effect tangibly confirming how the transaction delivers “benefits to the system.”
We can find references to this system operating for at least the past 35 years. Nearly 20 years ago, the CRTC wrote:
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.
In many transactions, the majority of funds have been dedicated to “grants and contributions to Canadian talent or program development funds.”
I think this has been a policy failure. Don’t get me wrong. I strongly support the idea of funding Canadian talent and Canadian program development. I trust that the federal government supports this as well – otherwise, such a program has no business being part of the CRTC’s license transfer approval process.
My issue is that if we, as a nation, truly believes this is an important sector to fund, then its funding should not be dependent on merger and acquisition deal flow.
Why not make the tangible benefits cost an explicit tax, with cash payable to the Receiver General and have Canada Revenue Agency perform the audit function on the valuation of the deal? Recent megadeals in Canada’s broadcast sector have seen tangible benefits packages in the hundreds of millions of dollars – breathtaking levels of funds changing hands.
Are we actually administering the funding programs with consistency, transparency and accountability?
Should the Canadian creative community be subjected to feast or famine funding formulae?