TORONTO – Canwest Global CEO Leonard Asper said today that the changes in the media world and the slumping overall economy means that his company has only just begun the fight for structural changes on the regulatory front.
In leading off his comments this morning in a conference call with financial analysts over his company’s quarterly results – including a billion-dollar write down – Asper sounded angry about the new policies on specialty channels and broadcast distribution undertakings released October 30th by the CRTC. Specifically, the part of the decision that denied his company’s request for a new levy to be paid by Canadian BDUs and their customers to conventional broadcasters for their over-the-air signals, drew his ire.
With CRTC broadcast license renewal hearings coming up for the company’s Global Television and E! networks in April, Asper said Canwest will continue to pursue fee-for-carriage (FFC) while also campaigning for a reduction in the number of hours of local content his broadcast stations must produce. Those are content requirements “that we really, can no longer afford,” said Asper this morning.
When it comes to FFC though, “it’s really about the fairness aspect of the system,” the CEO continued. Cable companies have been “monopolies for 30 or 40 years” who “pay some channels but not others,” and this should change.
(Ed Note: The BDUs say that with the must-carry provisions all local broadcasters enjoy, along with the simultaneous substitution of advertising over top of American broadcast signals when there is common programming, conventional OTA broadcasters are already paid, if not in cash.)
However, if the CRTC won’t let broadcasters have such fees, or stop the likes of NBC, CBS, ABC and Fox from broadcasting into Canada, “we’re saying, ‘fine, we’re no longer going to be able to fulfill the obligations set upon us’,” warned Asper.
“We’re not going to stand by and have our revenue taken away and still have these cost obligations… The convention television revenue model continues to be challenging and I’d say, broken.”
And because Canwest has been cutting costs at local stations over the past two years, it won’t even be eligible for the $60 million Local Programming Improvement Fund – which was also introduced in the October 30th policy release – which will dole out money for local news based on what has been spent for the past three years. Because Canwest has been cutting costs, it won’t be eligible for the new money, said Asper.
“We will be aggressive in pursuing changes,” on the regulatory front, he re-stated, also noting the Part II fee imbroglio and the court challenge the company has launched to be able to more freely advertise prescription drugs on TV in Canada as other potential revenue targets.
Asper did praise the BDU and Specialty decision for its moves towards allowing advertising on video on demand – and on distant signals, where broadcasters will be allowed to charge a fee for carriage of out of market signals.
On VOD, Canwest has so far been able to sell advertising “at significant premium rates than what is regularly paid for TV advertising,” noted Asper, who then added: “We also believe the revenue should belong entirely to the broadcasters.”
But back to local programming (where the company just this week cut 210 positions off the payroll, as Cartt.ca reported), company officials said in the conference call this morning it isn’t looking to pare back costs on foreign programming buys, but more on operating expenses at individual stations. It expects to spend the same on foreign programming in 2009 as it did in 2008, said Canwest Broadcasting president Kathy Dore.
Asper also pointed to the Commission’s approval of the sale of TQS in June of this year as a potential bellwether. The broadcaster was in bankruptcy protection (formerly owned by Cogeco and CTV) and Quebec company Remstar agreed to acquire it, with the caveat that it not be required to produce any local programming.
The Commission approved the sale, but said at least two hours a week of local news must be produced.
“We’re doing 35 hours a week in places like Hamilton and Victoria,” noted Asper, who explained this simply can’t be sustained. “There’s going to be a new norm in the obligations,” he predicted.
One might surmise from this week’s news out of Canwest that this more or less seems to be an E! problem (the former CH network in Quebec, Ontario, Alberta and B.C.), as Dore also noted: “We will be focusing the majority of investments and efforts in the strong brand we have in Global News.”
However, comparing TQS to Canwest is not quite apples to apples. The decision on TQS was not a blanket approval, or a change in policy, as the Commission promised to revisit the license of TQS in three years, saying it only approved the dramatic reduction in local programming requirements because of the broadcaster’s precarious financial state.
“Holding a licence to operate a conventional television station comes with certain responsibilities and obligations, one of which is to provide viewers with a significant amount of local news,” said CRTC chair Konrad von Finckenstein back in June when the TQS decision was announced. “Remstar’s proposal fell well short of this requirement. In this case, we have taken into account TQS’s precarious financial situation and will allow, as a short-term measure and on an exceptional basis, a reduced amount of local news. We fully expect that TQS’s situation will permit it to improve upon this amount within three years.”
What all this may show is that Commission Michel Morin may have been prescient in his dissent on the TQS case when he wrote that the exception the Commission made for the Quebec broadcaster: “risks prejudicing the entire Canadian broadcasting system.
“The Commission, as we have seen, seems to want to avoid, at any price, the bankruptcy of an over-the-air broadcaster in Quebec,” wrote Morin. “The intention is laudable. But no matter the results, it will be too high a price to pay.”
