Canada’s two largest private broadcasters joined forces today to warn that cable and satellite companies will destroy the country’s broadcasting system if the federal regulator doesn’t stop them.
CTVglobemedia Inc. and Canwest, rivals for television supremacy in Canada through their respective CTV and Global networks, told the Canadian Radio-television Telecommunications Commission they were making a joint argument because so much is at stake during the three-week hearings on the future of Canadian television.
CTV chief executive Ivan Fecan said cable and satellite companies will control Canadian television if they succeed in a bid to eliminate genre protection for specialty services and regulations that force them to carry conventional stations.
“They will compete with us for video-on-demand program rights, for VOD advertising revenues and sell local commercials on U.S. specialty channels,” he said.
Meanwhile, he said, the cornerstone of the system that pays for most Canadian content and local news is being squeezed by fragmenting advertising dollars and regulations that rob them of compensation for their signals on cable and satellite.
“With single-digit rates of return—the lowest in four decades—massive technological shifts occurring, the extremely expensive conversion to high-definition and significant and often uneconomic programming obligations, something will have to give,” he added.
Canwest president Leonard Asper told the CRTC that cable and satellite providers are speaking out of both sides of their mouth.
“They speak of competition, but are not interested in competition from foreign (competitors),’’ he said. They demand deregulation, but have profited from regulations that allow them to “expropriate” the signals of local stations without charge.
Both Fecan and Asper said their key priority for the future is gaining the right to charge cable and satellite companies such as Rogers Communications Inc., Shaw Communications Inc., and Bell ExpressVu about 50 cents for each conventional station they carry. Currently, cable and satellite does not pay to carry conventional stations, while specialty stations such as TSN, Newsworld or The Discovery Channel do receive a fee.
Both Fecan and Asper denied the charge to consumers would reach as high as $8 or $9, as the cable operators claim, saying on average the fee per subscriber would be about $2.40.
CRTC chairman Konrad von Finckenstein suggested if the commission allowed fee-for-carriage on conventional broadcasters, he might insist that the channels spend more on Canadian programs and local news. That did not sit well with the broadcasters, although they said they were willing to discuss a trade-off.
“We have been wronged for a long time and we’d like to have that wrong righted and we shouldn’t have to do something extra to right that wrong,” said Asper.
The broadcasters also asked the commission to end carriage of distant signals and time-shifting, which they said robs them of about $93 million in advertising revenue.
One official gave the example of a broadcast of the popular U.S. show Desperate Housewives on Sunday night, which was not only available on the local Ottawa station but from signals as far away as Halifax and Boston at the same time, and again from other stations in different time zones.
The spillage of viewers is one reason advertisers spend about $99 per person on television ads, as opposed to $228 in the U.S., he said.
Although simultaneous substitution, whereby broadcasters substitute their signal with domestic advertising, partly compensates broadcasts, Fecan said the revenue spillage remains considerable. He pointed out that “distant signals” have been ruled unlawful in the “free market United States of America.”
