The country's broadcasters have settled a long-running dispute with the federal government over licensing fees they are charged, averting a fight at the Supreme Court of Canada.
The deal announced yesterday will see the industry pay a capped sum of $100-million a year for its licences, a figure not out of line with what it was paying when the complaint was launched. The government will forgive $450-million in outstanding fees held in escrow during the legal process, and will work with the broadcasters to develop a structure that funnels the fees into distinct broadcast-related avenues.
Since 2003, the Canadian Association of Broadcasters (CAB) has been waging a legal war against what is known as the "Part II Licence Fee," under which broadcasters and the cable industry have been paying roughly $100-million a year into general government coffers since 1997.
The CAB had argued that the fee, which is charged for the privilege of using the federal broadcast infrastructure, was an illegal tax because the funds were not providing the industry with a specific service.
The $100-million cap also addresses the CAB's objection to the fees being tied to revenues. Broadcasters had been paying 1.365 per cent of all revenues derived directly from broadcasting each year, which had amounted to about $910-million by the time the CAB turned to the courts.
"The agreement represents a reasonable compromise for both sides," said Charlotte Bell, head of the CAB. "The industry's objective is to move forward to a Part II Licence Fee regime that is more predictable."
The CAB initially won its case in 2006 at the Federal Court trial division, but that decision was overturned in 2008 by the Federal Court of Appeal. The CAB then appealed to the Supreme Court, which was scheduled to hear the case beginning Oct. 19.
Canadian Heritage Minister James Moore acknowledged that the broadcasting industry contributes about $20-billion annually to the Canadian economy, adding "our government is recommending that the [Canadian Radio-television and Telecommunications Commission] develop a new, forward-looking fee regime" that can provide "stability and predictability."
The CAB represents private broadcasters such as Global Television and CTV. The latter is owned by CTVglobemedia, which also owns The Globe and Mail.
The timing of the settlement is critical, given the body blows the industry has taken because of the recession and a sharp decline in advertising revenues, according to Carmi Levy, an independent analyst and senior vice-president at AR Communications in Toronto.
"It's the best possible resolution because each side can now claim victory," Mr. Levy said. "It was in no one's best interest for this dispute to continue indefinitely. Really, they need to put down their swords, pick up their plowshares and work together."
