GATINEAU – This morning, CTV began its second appearance before the CRTC’s OTA licence renewal hearing this week with some tense exchanges with the panel’s commissioners, some unvarnished attacks on broadcast distributors, and a call for the regulator to protect the interests of consumers.
The tension level in the room first rose over the issue of the coming transition to digital transmission. CRTC chairman Konrad von Finckenstein noted the possibility of FreeSat signal delivery didn’t figure much in CTV’s application. He noted that Bell Canada proposed such a model yesterday, to ensure off-air viewers would continue to be served after DTV arrives in August, 2011. Under the FreeSat proposal, the chairman added, Bell would cover the maintenance costs for the system, which they would deduct from their contributions to the Local Programming Improvement Fund, but broadcasters would have to forego distant signals revenues.
Rick Brace, CTV’s president, revenue, business planning and sports, said his analysis of Bell’s FreeSat proposal is in "early days" but it’s "certainly worth exploring. Our objective is to have local into local….We do intend to sit down with them. We’d have to understand the (revenue) trade-off between the savings" for not having to put digital transmitters everywhere and not getting revenues for distant signals.
Von Finckenstein asked for any data CTV might gather in the discussions and then, referring to CTV’s statement on Monday that it would prefer a hybrid model of converting some major market transmitters to digital and allowing most other viewers to continue receiving service via BDUs, added: "To be perfectly clear. We are not going to countenance a loss of signal" to 8% of the population."
Fecan replied that once CTV puts transmitters in major markets, only 1% of viewers – 1% of viewers it currently serves, that is – will remain unserved.
Von Finckenstein was adamant that no matter how small the number of people who would not receive service, "It’s not going to happen."
Tension increased again when commissioners returned to the question of CTV’s plans to close three stations. CRTC vice-chair, telecom, Len Katz wondered whether CTV could file, by the end of this hearing, an application for a two-year licence renewal. The motivation seemed to be a wish to see what CTV imagined its revenues would be like in a period following the worst of the economic recession.
Fecan said no, his team would need more time. He and various members of his team then responded to suggestions that the public would like to be reasured about cost-cutting at CTV, given its decision to close its Wingham and Windsor, Ont. stations. He and CTV CFO John Gossling enumerated several cost-cutting and service streamlining measures at CTV and its A stations. When commissioner Peter Menzies noted that the CBC had discussed cutting executive compensation yesterday, Dawn Fell, CTV’s exec VP of human resources and operations, stated, "I can assure you that executive compensation levels have been significanly reduced."
Fecan’s opening statement also covered consumer interests. Consumers "are depending on you to put their interests above the interests of any corporate or lobby group, be it broadcaster, BDU, or union. If the BDUs insist on holding subscribers hostage, perhaps it is time to regulate basic cable rates again. In the United States, when BDUs kept raising rates and resisted paying for local stations, the government stepped in and protected viewers by re-regulating the basic rate and ensuring that local stations could get a fee for the important service they provide. So I might ask why everyone here in Canada is so afraid of cable."
Fecan also revisited a couple of themes CTV developed on Monday. He reiterated that the revenue model for conventional TV is "irretrievably broken", that the costs particular to conventional TV stations are higher and will remain higher than those faced by specialties, and that the services OTA stations provide, beginning with local news and other original programming, cannot be replaced by cable community channels.
Later in his opening statement, Fecan said that although some observers feel it will cost too much to save conventional TV stations, and that national broadcasting goals can be met by specialty stations, CTV disagrees. "The Comission has made diversity of voices a central tenet of its mission….Conventional is so much more than the sum of its parts and its future is critical to meeting the Commission’s expectation pertaining to the availability of a wide range of voices. Otherwise,it is easy to envision a system where two or three BDUs are able to own and control the system from stem to stern."
He added that the recession has accelerated the process of breaking the revenue model, which relies largely on advertising dollars but is not the cause of the problem.
"And so, at today’s hearing, instead of a bright future, instead of opening more stations, we are closing them," he said, referring to plans to close A Channel stations in Windsor and Wingham, Ont. and its CBC affiliate in Brandon, Man. "Instead of more program commitments, we are offering the status quo as the new incremental. Instead of being worried about not receiving a full seven-year term, we are worried about whether we can afford to re-apply in one year."
The CRTC has proposed one-year administrative renewals for licensees being heard here, at what is expected to be an 11-day hearing, followed by a hearing next spring for full-term renewals. Decisions on this year’s applications are expected to be out before the end of August, when the broadcasting fiscal year ends. The CRTC says it will decide by May 15 on the issue of whether conventional services will be required to spend an equal amount on foreign and domestic programming, before executives head to Los Angeles to preview and order U.S. series and movies for the next TV season.
