HUNDREDS OF MILLIONS of new dollars could pour into the Canadian television system under a new fee-for-carriage plan proposed by Canada’s two main private broadcast networks.
Rivals CTVglobemedia and Canwest made a little history Friday by filing a joint submission to the CRTC’s review of its policies governing broadcast distribution undertakings (cable and satellite companies) and specialty services. Those hearings are set to begin April 7th.
Saying conventional television – thanks to the ever-increasing rate of audience fragmentation driven by specialty services and new media outlets – is in “crisis”, the broadcasters want the Commission to add a subscriber fee in the range of 50- to 70-cents per local broadcast signal per month.
This idea was already rejected by the Commission in May, when it said there wasn’t enough evidence to impose new costs on Canadians in its conventional television policy release.
Taking the mid-point of 60-cents per signal per month and multiplying it by the nine local or regional over-the-air private conventional broadcast signals now carried by Rogers Cable in Toronto, for example, such a new fee would deliver about $60 million a year from the pockets of cable subscribers, through Rogers, to the broadcasters.
The owners of three of those Toronto stations, Citytv, OMNI.1 and OMNI.2, Rogers opposes any new fee, as do its own joint research backers, Bell Canada and Telus.
“Studies commissioned as part of this process from independent research organizations unequivocally indicate that proposed fees for OTA signals, whether one, two or five dollars per month, are unacceptable. If forced to pay such fees, consumers will rebel. Some will give up on cable or legitimate satellite delivery systems. Others will economize by subscribing to fewer discretionary services. Still others will opt out altogether, choosing to source the TV programs they watch from the Internet, DVDs or from illegal satellite dishes,” reads the Rogers submission.
“The resulting cost to the Canadian broadcasting system could be as high as $1.5 billion per year.” (its emphasis)
The Rogers, Bell, Telus submission is backed by research recently done by Harris/Decima which says 84% of Canadians oppose a new fee for broadcast TV.
The CTV/Canwest submission also has its own research on how madly Canadians are in love with their local news and says that despite protestations of mass consumer defections due to such new cost impositions, the BDUs’ own recent actions show such fears are baseless.
“In fact, Rogers recently announced new price increases effective March 1, 2008, which will, among other things, raise the price of basic cable by $1.00 per month and the price of extended cable by $2.50 per month,” explains the Canwest/CTV submission.
Adds Friends of Canadian Broadcasting, an English TV watchdog, in its submission: “On numerous occasions BDUs have suggested to the Commission that even the smallest of incremental charges will result in a loss of customers. Obviously no customer wants an increase in any bill but increases are a continuing reality as we have recently witnessed, for example, from Rogers Cable when it announced price changes for many of its services. In the case of Rogers, Friends notes that while even the smallest incremental increase for programming is feared to cause a loss of customers, these same customers are not believed to object to paying a monthly digital services fee of $2.99 for the singular privilege of connecting a customer owned PVR to digital cable.”
Friends suggests a couple of different funding options, too, saying any new fees should be applied only to higher income, digital cable homes and that if the CBC were told by the federal government it could no longer sell ads, that would drive more revenue into private broadcasters’ hands.
Shaw Communications, in its submission to the Commission, takes umbrage that the whole FFC issue is even being brought up again already, since the request was dealt with and denied in the CRTC’s new conventional television policies released only eight months ago.
“Broadcaster use of selective information to argue financial need does not justify reconsidering a recent decision or diverting an important hearing from its primary purpose – consideration of a broadcast distribution framework that ensures the ability of Canadian cable and satellite companies to offer customers the choice and value they now demand. This is fundamental to the ongoing success of our broadcasting system,” reads the terse Shaw contribution to the proceedings.
“A bold and creative rethinking of broadcast regulation is needed. Proposals for fee-for-carriage and distant signal fees are yesterday’s thinking. They are based on the idea that more subsidies (these to be paid by customers) will shore up our system. Instead, what we really need are more innovative responses to challenges of the new media market.”
The broadcasters also want new fees for out-of-market signals carried so that consumers may time shift (so this writer can see The Simpsons on Sunday at 11 from the western Global TV feed instead of at 8 from Global Toronto, for example). They also want out-of-market American signals stopped altogether.
“Together with retransmission consent for Canadian distant signals, simultaneous substitution must be enforced in local markets, and the distribution of out-of-market U.S. 4+1 signals must be prohibited. These three factors are inextricably linked: if out-of-market U.S. 4+1 stations are freely available, there is little incentive for a BDU to engage in negotiations to carry Canadian signals at all, since Canadians would be able to access top U.S. programming on those stations. Prohibiting the distribution of distant signals without consent, as is the case in the U.S., will protect both the revenues and the program rights of local broadcasters,” reads the CTV/Canwest submission.
It’s difficult not to feel some sympathy for the broadcasters’ arguments. They are bound by the Broadcasting Act to make or source – and air – Canadian content. However, they are forced to make 75% of it by getting it from independent producers, where costs may be higher than if they were allowed to make dramas or comedies themselves.
Traditional media like conventional, linear, television is struggling to adapt to the new, on demand all the time world, plus, the broadcasters are on the hook for millions in new spending on digital/high definition conversions that won’t bring new revenue but must be completed by the end of August, 2011. And gathering and producing local news has always been an expensive proposition.
Then again, who wants to pay $5 a month extra on their cable or satellite bill for something that could always – and can still – be had for free, over the air, and is owned by companies valued in the billions.
“In the digital media environment,” adds a submission from Telus, “where the “consumer is in charge”, adding yet another tax on the regulated broadcasting fare is part of the problem, not the solution.”
