CBC/Radio Canada is proposing a new fund to support local news programming that would be paid for through a levy on cable and satellite TV providers.

The public broadcaster in its presentation Friday to the Canadian Radio-television and Telecommunications Commission’s hearings on the future of the TV system said the fund would help offset ad revenue losses at conventional stations.

It would also ensure that Canadians’ strong demand for local news continues to be met, CBC/Radio Canada CEO Hubert Lacroix told the hearings in Gatineau, Quebec.

The fund would be built with contributions by broadcast distribution undertakings (cable and satellite service operators) equal to 1 per cent of their gross revenue from broadcasting services and would be on top of a 5 per cent contribution already made by the BDUs to support original Canadian programming.

The CBC is also recommending that TV stations no longer be obliged to offer over-the-air services to the 5 to 7 per cent of households without cable or satellite.

Instead, local programming would be available only through subscription, with distributors charged a wholesale fee for local stations after negotiations with the networks.

CRTC vice chair for broadcasting Tom Pentefountas said the new funding mechanisms would translate into a $2 increase on the monthly bills of all cable and satellite subscribers and amount to hundreds of millions per year in added costs to carriers.

He said the idea might not sit well with Canadians who would be forced to pay for local programming services that have been available over the air for decades.

“Is the capacity of the consumer to pay endless?” Pentefountas asked.

The CBC also said Web-based foreign media streaming services such as Netflix that meet a minimum revenue threshold should be required to pay into the Canadian Media Fund.

TV industry consultant Barry Kiefl, a former director of research at the CBC, said while the levy proposal is not likely to be accepted by the CRTC, “some variant might work.”

Many TV and radio outlets are struggling because of the loss of advertising dollars to competing platforms and private broadcaster CTV has warned that some local TV stations could close if the funding gap is not addressed.

Although the CBC receives taxpayer support it effectively lacks the option of shuttering outlets in the face of Parliamentary resistance, but has indicated plans to shorten local broadcast durations among other cost saving measures, Kiefl said.

CBC’s local news viewership remains strong in eastern Canada but Kiefl said the CBC English-language newscasts lag competitors in most markets in central Canada including Toronto partly because of cuts in local reporting budgets.

CRTC chair Jean-Pierre Blais suggested that the CBC’s funding problems fall within Parliamentary jurisdiction, adding that the proposal to shut down local over-the-air broadcast transmitters could spark a public backlash.

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Kiefl said the CBC is dealing with reductions in funding from the federal government and the loss of future advertising revenue from NHL hockey. He estimates that the CBC’s ad revenue will fall to barely $100 million without the NHL in 2014-15, versus $750 million at CTV and $400 million for Global.

Kiefl said CBC TV’s primetime viewership share dropped by 40 per cent annually to just 5.3 per cent by the mid-point of the 2012-2013 TV season, the lowest level in its history.

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