CEO says he feels alone fighting for our culture
IT WAS A PIERRE KARL PÉLADEAU in fine form with whom we had a phone conversation on Tuesday after a speech he gave at the Montreal Council on Foreign Relation. That speech was part of public relations campaign he is leading on the future of the Canadian broadcasting system.
This time the Quebecor CEO is attacking Netflix, the specialty channel affiliation regime, the CRTC, the CBC, Bell and the apathy he feels from so many. While the system is crumbling nobody is being spared, and not enough Canadians seem to care.
What seems to have triggered his anger most is that while his company’s channels perform better than Bell’s overall in ratings, they lag significantly when it comes to affiliation revenues, so it accumulates multi-millions in losses – and that he sees no end to this situation in the present system.
(Correction: The above paragraph was corrected to reflect that TVA specialty channels collectively do better in the ratings than Bell Media's in Quebec. The prior piece said TVA Sports out-rated Bell Media's RDS, which is not the case. Cartt.ca regrets the error.)
“TVA’s channels are not channels we bought,” he argues in our interview done in French, “They are channels we have launched from scratch. We had the courage to diversify the offer to Quebeckers, to the francophone market. But that courage had to be bankrolled by cheques.
“On the other hand, Bell bought Astral that had had genre monopoly and lost a lot of subscribers, but their affiliation revenues continue to increase,” he continues, “while their market shares go down and in number of subscribers.”
He sees this as unfair and asks if the CRTC wants to penalize innovation and success in order to promote the old genre monopolies. A surprising economic model, he finds.
And when we make the point that those fees are negotiated and not set by anyone, he’s unbowed.
“I will give you an example,” he explains. “On TVA Sports rates, we went for mandatory arbitration and the Commission found we were asking too much. It is obvious that Bell is a competitor. They have a channel called RDS. So, Bell turned down our proposal and went for mandatory arbitration. Meanwhile, we negotiated with all the other distributors and they all agreed to our rate.”
Bell TV is, of course, Quebecor division Vidéotron’s primary competitor on the cable TV side in Quebec.
“Other distributors are not in a conflict of interest situation. They do not own channels. So, I do not understand why it is the CRTC who determines rates when it should be the subscribers who should be deciding: ‘If TVA Sports is too expensive, we will not take it. And is RDS is too expensive, we will not take it,” he goes on. “Don’t worry, there will never be price fixing with Bell, that’s clear!”
“I asked the CRTC people: tell me how much money, how many millions, today, do I have to lose.” – Pierre Karl Péladeau
I have a hard time understanding this and I asked the CRTC people: tell me how much money, how many millions, today, do I have to lose. Because, it is you, the CRTC, who decides that. You determine my rate, tell me,” he says. “This way, I will know whether I should shut down my channel or keep it open because right now I have no profitability expectation,” he continues. “I am accountable to my shareholders. That is the issue.”
For Péladeau, besides the affiliation payments and the regulation imposed by the CRTC, readers will know that another primary irritant for the CEO is that foreign video distributors like Netflix are not forced to play by any of the rules Canadian broadcasters must. They do not even collect GST.
“They are eating the distributors’ lunch, and at the same time, the Canadian Media Fund (CMF) and the whole Canadian broadcasting ecosystem,” he implores.
He doesn’t believe our politicians appreciate the severity of the situation. “Not the current government,” he says, “because they gloat about signing this so-called agreement with Netflix. We have not seen Netflix materialize but meanwhile, they have a free ride.”
Péladeau mentioned ten days ago, he met with the Heritage Minister, Pablo Rodriguez, and told him since the OTTs (over-the-top video providers) do not contribute to the CMF and because BDUs are losing subscribers, it creates a shortfall and that if the federal government wants to maintain the same level of funding, it will have to pay more. Péladeau said Rodriguez did not seem surprised but it got his attention.
“If Apple invests one billion in content, they will do it out of their petty cash.” – Péladeau
“It is as if the CRTC is living in another era. As if it had not realized Netflix existed.”
“It is as if the CRTC did not realize that with Apple, which announced a streaming service (two weeks ago) which is a thousand billion dollars in market capitalization. If Apple invests one billion in content, they will do it out of their petty cash,” he says, mockingly. “Is there a broadcaster in Canada that can invest one billion in content? If there is one, tell me, I have not seen one yet and the CRTC keeps its head in the sand.”
“That reality is now, not in three years, it is here!”
His goal with this new public campaign is to attempt to wake up decision makers who are not reacting quickly enough, even though, the situation is far from new and Péladeau’s timing can surprise.
“It is true, I am back. I could have woken up earlier,” he admits, “but better late than never. Danger looms. If we keep on like this, we will be left with only our eyes to cry and our heads to think and close our stations. The situation is serious, it is the last call, we are closing.”
“So, I have decided to discuss with the decision makers, it is the task I have given myself,” he says.
The Quebecor CEO said he plans to meet the opposition leaders in Ottawa, too, where he will also soon speak at the Canadian Club. He will meet Québec’s minister of Culture and Communications, because this issue has an impact on Quebec’s culture.
“CBC management is cannibalizing the system and, furthermore, it is producing some of that content with money from the CMF, itself fed by cable subscribers’ money. This is over the top!” – Péladeau
Péladeau also decries the lack of support from other Canadian broadcasters and carriers in this crusade.
‘The CBC not do it, with its own OTT,” he says. “Bell will not do it. Because they do not want to write off a billion dollars of goodwill that they acquired when they bought Astral. If they did, it would demonstrate the weakness of their strategy.”
On Netflix, he mentions:’ Netflix does not care to get money from the CMF, because if they did, they would have to be subjected to its obligations. It is really the last thing they want. They do not want to be subjected to rules written by bureaucrats in Gatineau. The Reed Hastings’ of the world could not even find Gatineau on a map!”
An interview with Pierre Karl Péladeau is not complete without a few shots at Société Radio-Canada (SRC/CBC). So, here goes:
“The worst is that the SRC is now an OTT! The SRC is not a BDU but it became one because it has an OTT. Here in Québec it offers a service called Tou.TV Extra at $6.99. If you want exclusive content like Netflix or Illico TV (Quebecor’s own OTT), you pay $6.99 and you will have exclusive SRC Canadian content, content from other providers, like Bell that you could find on cable and, finally, foreign content,” he said.
“CBC management is cannibalizing the system and, furthermore, it is producing some of that content with money from the CMF, itself fed by cable subscribers’ money. This is over the top!”
When we mentioned the illustration often shown in Cartt.ca next to stories about him show him with boxing gloves, he repeats “Someone’s got to do it”, he says. “In the old days, there was another one who could. But unfortunately, he passed away.
“We have different personalities, but he was always ready, he was ‘trigger happy.’ I am talking about Jim Shaw!”
Original artwork by Paul Lachine, Chatham. Ont.
