The elimination of simultaneous substitution would be “immediately devastating” for local TV warned Bell Media president Kevin Crull (pictured) at the CRTC’s “Let’s Talk TV” hearings Wednesday.
Losing simulcast for lead-in and wraparound would be 50 steps backward. Keeping it in the same timeslot is two steps forward
Kevin Crull, Bell Media
Appearing on the third day of the hearings in Gatineau, Que., on Wednesday, Crull and his BCE colleagues said they supported so-called “skinny” basic cable packages – though asked the federal regulator not to mandate the approach for all BDUs – and warned against eliminating simultaneous substitution, noting that it contributes as much as $450 million annually to the Canadian broadcast system.
The company said in its presentation that live events such as the Super Bowl contribute as much as $40 million annually to its flagship TV network CTV.
Bell executives also noted that simultaneous substitution provides additional benefits beyond revenue, including $85 million in annual promotional value for Canadian programming.
“Eliminating simultaneous substitution is clearly not a risk worth taking when there are fewer than 500 complaints out of more than half a billion hours of simulcast viewing annually, and the vast majority of intervenors, including all major stakeholders and more than 90% of individual consumers that addressed this issue, have supported maintaining simultaneous substitution,” said Crull during the BCE presentation.
Under questioning from CRTC commissioner Candice Molnar, Crull said that CTV uses the Super Bowl to extensively promote Canadian programming – 60% of the promos it runs during the game are for Canadian shows, he said – and launches a new Canadian show in the post-game timeslot every year.
He suggested there would no longer be any incentive for CTV to carry the NFL’s marquee game if it wasn’t shown in simulcast. “If I broadcast the Super Bowl and it was also broadcast on NBC, I would have very few viewers,” he said.
Crull said that any scheduling flexibility afforded Canadian networks by the elimination of simulcast substitution would be a “small benefit” compared to loss of the lead-in, wraparound audiences and promotional opportunities afforded by showing U.S. programs in simulcast.
“Losing simulcast for lead-in and wraparound would be 50 steps backward,” he said. “Keeping it in the same timeslot is two steps forward.”
Netflix was also a frequent topic of discussion during BCE’s presentation, with Crull admitting that he has been surprised by consumer appetite for library TV and movie content.
Asked by Commissioner Molnar if Bell has ever considered becoming an over-the-top service similar to Netflix, Wade Oosterman, president of Bell Mobility and residential service, said its business model precludes it from generating the volume and variety of programming required to sustain that approach.
“That’s not our business model and we can’t meet our objectives or our passions of creating local content in that way,” said Oosterman. “An over-the-top model is incapable of supporting our business and those objectives.”
Crull said the library content offered by Netflix – much of it older TV programming – has provided a foundation for the service to create a smattering of original content like Orange is the New Black and House of Cards. Bell Media, however, currently has 76 scripted projects in development, said Crull. “We can’t do what we do that way,” he said.
Rogers and Shaw recently partnered on a streaming video-on-demand service called Shomi, and Crull hinted that a similar venture is in the pipeline at Bell. “I would expect that we would have a channel, if you will, that will have a lot of long-tail content,” he said.
Crull suggested that BCE is at a disadvantage when competing for rights against Netflix, which recently agreed to pay $4.2 million per episode for global rights to the show Gotham.
Crull also told the CRTC that the possible adoption of a pick-and-pay approach to cable/satellite subscriptions would “absolutely” have negative revenue implications for BCE, resulting in the likely demise of several of its low-interest channels like Book TV and MuchVibe.
He also suggested that the current structure for cable/satellite packages offers value for consumers. Extrapolating the concept of unbundling to its furthest extreme, Crull said that if a consumer were to purchase individual episodes of their favourite program at current iTunes prices of $2.99 to $3.49 per episode, it would cost upwards of $800 a month for the “ultimate” in packaging flexibility.
Marko Bibic, executive vice-president and chief legal and regulatory officer for BCE and Bell Canada, said that Canadian distributors are being further squeezed by popular U.S. programming services.
He said that one unnamed U.S. specialty service asked for a 300% rate increase in recent renewal negotiations, while requiring that Bell agree to a penetration guarantee increase from 50% to 75% of its subscriber base. They are also requiring Canadian distributors to pay for their services based on 100% penetration, he said.
“You cannot have an environment where U.S. programmers have enormous leverage over Canadian [distrbutors] and the reverse isn’t true,” said Crull.
