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Government renews cash to embattled TV fund amid industry standoff

OTTAWA (CP) _ Heritage Minister Bev Oda has renewed $200 million over two years to the Canadian Television Fund, now rocked by a crisis of industry support that could staunch its cash flow and threaten fall productions.

Her statement Friday comes as two of Canada’s largest cable companies are refusing to pay monthly contributions to the fund in protest of how it operates.

Oda has invited five of the major players in the fund to discuss their concerns with her and another senior official on Tuesday.

She said the boycott by Shaw Communications (TSX:SJR.B) and Videotron, which is controlled by Quebecor Inc. (TSX:QBR.B), is a serious matter. And it will essentially kick-start another review of the fund under pressure from private-sector contributors.

In the last month, Shaw and Videotron have stopped monthly payments that so far total more than $6 million.

"By withholding their mandatory payments, it will create a challenge for the television fund to meet its cash flow requirements," Oda told a news conference on Parliament Hill.

"It is by regulation of the CRTC (Canadian Radio-television and Telecommunications Commission) that they’re asked to make a contribution to the production industry."

Still, she said: "I’m confident that we can find resolution."

The minister says she wants to hear any complaints, particularly about how the fund is governed. She noted that the $260-million Television Fund, set up 12 years ago to support homegrown programs, was reviewed in 2001. A new governance structure was subsequently announced in 2005.

"Obviously there’s still some concerns and discomfort with the structure that was set up.

"I would like to hear what those discomforts are."

Shaw and Videotron are pushing for more control over how $150 million a year in industry contributions is spent, including the one-third share of television fund cash that helps to independently produce programs used by the CBC and its French-language counterpart. It’s a sore point among some private contributors because the public broadcaster already gets more than $1 billion a year from taxpayers.

The CBC says is doesn’t receive any money from the fund, but that a third of CTF productions are earmarked for the broadcaster because it is the single largest investor in original Canadian programming.

Douglas Barrett, chairman of the fund, says the TV production industry faces an impending $63-million budget shortfall after the Shaw and Videotron pullout. The fund counts on the two companies for 20 per cent of its revenues, Barrett said.

"Our biggest and most immediate concern is all the production applications in hand right now," and the tens of thousands of jobs that depend on related projects, he said in an interview Friday.

"We need to find a solution by the end of the fiscal period (March 31) so we can be in business for next year."

Oda’s announcement Friday "saved the day" as a show of confidence in the fund and a step toward a long-term solution, Barrett said.

Her willingness to reviewing the fund’s rules and structure showed "open mindedness," Quebecor executive vice-president Luc Lavoie said Friday. But the company’s terms aren’t negotiable.

"It’s not enough (for the government) to say ‘We will review,"’, he said from Montreal. "We want to know the details, we want to know where it’s going. Because even though we’re going in there with an open mind, we’re going in there with a very firm position as well."

Videotron, along with Rogers Communications (TSX:RCI.B), Cogeco (TSX:CGO) and Bell ExpressVu have been invited to the Tuesday meeting, he said. Rogers Communications declined comment on Friday.

Created in 1994 at the request of the CRTC, the fund has helped pay for such TV shows as "Degrassi: The Next Generation" and "Da Vinci’s Inquest."

If Shaw and Videotron refuse to co-operate, Barrett will ask the CRTC to explore legal action to recoup that money.

"The regulators have a duty to enforce the law."

New Democrat MP Charlie Angus, the party’s Canadian Heritage critic, says Oda must take much of the blame for the current standoff.

"It took a full-fledged crisis in Canadian television for the public to finally see the elusive heritage minister," he said Friday in an interview.

"She sent very, very mixed messages as to whether this government was committed to the Canadian Television Fund.

"And then when Shaw announced they were pulling out, there was radio silence from Bev Oda. She didn’t take this on at all until it was all out in the public media, and we’d already lost Videotron.

"It’s nice that she showed up, but she definitely, I think, is responsible."

Oda’s message to Shaw and Videotron should be: "Pay up," says Angus.

"They’re already laying down the terms and conditions of what they want from this government. It’s not their place. They have absolutely no business pushing their weight around like this."

Contributing relatively small amounts to the creation of independent programs is a sweet deal for the cable companies, Angus said.

The television fund was set up "following massive deregulation that was allowed by the CRTC.

"They’re in protected markets _ they’re not facing open competition from American cable giants across the border who would love to be able to get into our markets."

The fund’s board of directors includes representatives from the Canadian television production and distribution community, Canadian Heritage, Canadian cable and direct-to-home satellite companies and Canadian broadcasters. Board members are elected each year, and at least five must be independent.

Videotron contributed $14.3 million to the fund in 2005 and estimates that its obligation will be about $16 million this year. Shaw contributes about $56 million.