RJR Group executives objected to a proposal that would see the radio and TV conglomerate to pay five per cent of its revenue as a licence fee equivalent to $100 million to its regulator.

RJR recorded $1.99 billion in revenues for its year end March 2010 and the licence fee proposal would amount to just under half of the $221.6 million RJR earned as after-tax profit over the review period.

Currently TV and radio stations do not pay a revenue licence fee to its regulator, the BCJ. However subscriber television (STV) or cable providers pay this fee according to a BCJ compliance report. Thus the proposal is aimed at implementing this fee across the entire industry. The matter was disscussed at a Forum on Policy and Regulation in the Electronic Media Sector at the Pegasus Hotel in Jamaica, this week. The forum was hosted by the regulator the Broadcast Commission of Jamaica (BCJ).

RJR Group managind director Gary Allen questioned whether a tax on traditional media entities would contradict its intent in achieving equity but rather compromise the viability of big media.

“How are we going to address policy in terms of licence fees, which is in the form of tax on the revenues on media entities, at a time when we have spectrum user fees, increased government reserve time usage, (threat of) breaches, and the constantly evolving media landscape when you have to be investing to keep pace of quality,” he stated. “How do you regulate fairly and not be perceived as penalising those who have invested early in technology.”

The BCJ has employed the services of Canadian consultants—Nordicity to examine this proposal which would finance the BCJ’s budget, however a portion could go into a fund to support local programming.

Kay Osbourne, general manager of TVJ part of the RJR Group also at the conference added that there is already a lot of local programming which obviated the need for a fund financed by media.

“How do you BCJ support the local stations who want to bring local content rather than drain funding out of the market to support something that is outside your remit. Quite frankly,” Osbourne stated about the fund adding that 55 local programmes are currently in circulation.

Incidentally Marcia Forbes representing Phase 3 Productions and former permanent secretary in the Energy ministry sided with the BCJ’s proposal stating that it would benefit the industry.

“Looking from both points of view it is clear to me that what is proposed with this five per cent fee on gross revenue of broadcasters is an idea whose time has come,” she said. “I can’t see how we going to back away from it…this is the way to go in order to produce more local programming. It is something I firmly believe in.”

This fiscal year the BCJ expects to collect $132 million in licence fees or nine per cent more than year-earlier levels despite 70 per cent of cable operators signalling payment difficulty due to higher arrears associated with the recession. In fact, 30 per cent of subscriber television (STV) licensees were non-compliant and 40 per cent had partially paid licence fees to the BCJ; according to its latest Monitoring and Compliance Report obtained by the Observer. The report published in June, reviewed three quarters from July 2009 to March 2010.

The BCJ conducted a series of visits with licensees across the island over the review period and found that the global economic recession was impacting revenues with indications of a real decline of between 15-45 per cent.

It meant that only thirty per cent of STV licensees have paid their fees including Central Communication Services, Flow, Cornwall Communications, First Choice Cable, General Satellite Network, Inntech Communications, Jamaica Cablevision, Linscom Network, Logic One, Mars Cable Vision, Mikes Electronics & Cable Network, Santastic Cable Systems, Summit Satellite Systems, Tru Star Cable Television Network and Westar Communications.