Canadian regulator moves to help broadcasters

* Temporary fee hike could help smaller stations

* Cable firms say the new policy hurts consumers

By Allan Dowd

VANCOUVER, British Columbia, July 6 (Reuters) - Canada's broadcast regulator signaled support on Monday for having the country's cable and satellite providers pay local broadcasters for programming they now get for free.

The federal regulator said cable and satellite firms will temporarily pay more into a fund to promote local production and said broadcasters can use the money for news and other programming in smaller markets.

Two cable and satellite firms blasted the decision by the Canadian Radio-television and Telecommunications Commission, calling it a "stunning reversal" of earlier decisions and saying it would raise consumer bills.

The head of the CRTC had said as recently as May that the agency was cool to the idea of "fee-for-carriage", under which cable and satellite companies would pay over-the-air broadcasters for their signals. However, the CRTC said at the time it was willing to look at helping conventional broadcasters who said they needed the money to stay afloat.

The CRTC said on Monday the cable and satellite firms must contribute up to 1.5 percent of their gross broadcasting revenues into the fund, an increase of 0.5 percentage points, boosting it to C$100 million ($86 million) from C$68 million.

"We have taken steps to ensure that broadcasters, and particularly those in smaller markets, continue to provide Canadians with programming that reflects their needs and interests," CRTC Chairman Konrad von Finckenstien.

The agency will also begin hearings in September on a new regulatory framework for broadcasters that it said could include provisions dealing with future revenue sources.

Conventional broadcasters such as Canwest Global Communications CGS.TO and CTV have argued that Canada's satellite and cable companies should pay them for carrying their signals.

The fight over such fees comes at a time of crisis for many broadcasters, who have seen their advertising revenues plunge as companies slash spending because of the recession.

The economic crisis has forced broadcasters to cut staff and programming, with companies selling or closing some stations, particularly in smaller markets.

"The commission's commitment to supporting local programming is very important at this time, given the state of the economy, and is a critical first step to resolving the broader economic issues facing conventional broadcasters in Canada," said Hubert T. Lacroix, chief executive of public broadcaster CBC/Radio-Canada.

Cable players such as Shaw Communications (SJRb.TO) and Rogers Communications (RCIb.TO) have called fee-for-carriage proposals unfair, and accuse broadcasters of wanting consumers to subsidize them because of bad business decisions.

"Today's CRTC announcement says that, not withstanding earlier rulings by the CRTC and notwithstanding the lack of support by the Canadian Heritage Committee, the CRTC is seeking to impose another new tax on consumers," Rogers said.

Satellite television provider Bell Canada, a unit of BCE (BCE.TO), also complained the fees were unfair to consumers. BCE also owns a small stake in CTV, which has lobbied in favor of the fees. (Reporting Allan Dowd, editing by Rob Wilson)