Do business people intentionally give really boring names to really important things so that regular folk won't notice when they're being screwed? For years, nobody outside the finance community cared about abstract investment tools like derivatives and mortgage-backed securities – until we all ended up on the edge of apocalypse. Smart people have told me that whenever they hear the term "regulatory framework," their brains automatically toggle to something else to prevent a bout of narcolepsy.
But stay with me here, because BCE Inc., the behemoth formerly known as Ma Bell, is trying to weasel out of paying tens of millions of dollars it owes into a system supporting homegrown artists and Canadian programming, and nobody's going to pay attention because it's all happening under a government-mandated scheme saddled with the dull label of "tangible benefits." And the case offers a piquant portrait of the Canadian media industry's cynicism, and its growing sense that it doesn't have to answer to anyone except its shareholders.
First, a briefer: When one company in Canada buys a broadcasting licence from another, it has to pay a sort of tax, a percentage of the purchase price, toward the development of the entire system. This "tangible benefit" is supposed to help to offset the negative effect that the resulting industry consolidation has on our viewing and listening options. The idea is that since Shaw buying Global or Bell buying CTV translated into fewer broadcasting companies competing for programs, the extra money helps to offset the lower fees that producers can charge.
The Canadian Radio-television and Telecommunications Commission requires companies buying television stations to put 10 per cent of the purchase price toward the development of TV-related programming. The figure for radio station purchases is 6 per cent, and it goes to initiatives such as the Radio Starmaker Fund, which provides marketing and promotional assistance for emerging musicians.
Since 1999, when the policy was introduced, hundreds of millions of dollars in tangible benefits have helped to support such things as Canadian Music Week, the hiring of new teachers at the National Theatre School and an annual native film and media arts festival. It's now one of the key sources of funding for Canadian programming.
Which brings us to this week. On Tuesday, BCE-owned Bell Media announced the details of the $200-million tangible benefits package it is proposing to spend over 10 years as part of its $3.3-billion takeover of Astral Media. The promises include $60-million in radio benefits and $95.8-million toward what it calls onscreen benefits, which encompass everything from TV programming to film festival sponsorships.
But then there are two curious pools of money that fall under the TV category: $40-million for something it calls "Supporting Broadcasting's Digital Future," and $3.5-million toward mental-health awareness initiatives. Both are laudable and, on their face, uncontroversial. Who, after all, could argue with the good work Bell does with its Mental Health Initiative through its annual Bell Let's Talk Day, even if that's not really what the fund is supposed to support?
The $40-million cash for "broadcasting's digital future" is also going to go toward a population desperately in need of support, Canadians in the North who are on the other side of this country's infamous digital divide. (In most communities north of the 60th parallel, people are lucky if the local phone company, NorthwesTel, provides the equivalent of the hiccupy dial-up service that most of us had in the mid-1990s.)
But here's the hitch: The CRTC had already told NorthwesTel, BCE's wholly owned telecom subsidiary, to modernize its system, which it has failed to do despite years of $20-million annual subsidies from the commission. Last December, the CRTC even said it was "concerned that NorthwesTel's shareholders have benefited ... to a far greater extent than its customers." The $40-million attempt to self-deal is more of the same.
It's also a neatly cynical trick, setting up a culture war between privileged Southern Canadians and bereft Northerners, who can't even watch a video on YouTube. And if it were really a matter of choosing sides, there's obviously no choice: The North should get the money.
But BCE has a history of trying to avoid its obligations. When it bought CTV last year, it argued that it had already paid for tangible benefits when it had bought part of the network in 2000 and should therefore not have to pay again.
That betrayed a fundamental misunderstanding of the policy, treating tangible benefits like a penalty or a bribe rather than something to strengthen the Canadian broadcasting system to benefit all of us. In the end, the CRTC said Bell had to pay $245-million.
It's trying the same shell game here, which is especially galling since the policy is supposed to ensure that most of the tangible benefits flow to third parties.
The CRTC has a new chairman, Jean-Pierre Blais, a veteran civil servant who has a reputation for being friendly toward the industry. Bell's unprecedented proposal is the first real test of whether he will stand with them or with Canadian consumers. You might want to pay attention to what he does. Even if it gets a little boring .