I’LL MISS STUART LANGFORD if he departs the Commission this fall when his current term is scheduled to expire.
We media types love a good quote and while I’ve never met the man, I’ve read enough of the CRTC commissioner’s sometimes entertaining dissents from certain decisions that I will miss his take on things if he goes. (Here are a couple of examples.)
While Drew Craig sounded a little uncomfortable with Langford’s line of questioning Wednesday morning in Calgary during the Commission’s hearings there, the commissioner’s oddball analogies drew some guffaws audible even on the webcast we listened in on.
We’ve reported on this previously, but to recap: Craig wants to set up a new company, Only Imagine Inc., which will re-sell to Canadian advertisers three of the four 30-second ad slots made available each hour to cable companies by American cable channels like Speed, Golf, A&E and CNN. OII’s hardware would sit inside Canadian cable headends to play the ads and a large chunk of the money brought in would go towards producing new Canadian TV content.
The fourth ad slot would remain with Canadian BDUs to promote their own products.
As the regulations now stand BDUs can’t sell the time and 75% of those two minutes must be given over at cost to Canadian broadcasters and 25% of the time can promote BDU products and services.
Cable companies, as Rogers Communications vice-chairman Phil Lind would reiterate after Craig’s presentation, vehemently oppose the application. "I do not understand why the Commission allowed the application to get this far. It should have been returned to sender last summer," he said. "The two to three minute ‘local avails’ that are the subject of this application are our local avails – that is, the cable company’s local avails. We acquired them in negotiations with the U.S. programming services. They belong to us."
(As the head of Rogers Cable in the States in the 1980s – when Rogers was the fourth largest U.S. MSO – Lind knows where and how the local avails came to be as he was involved in the first negotiations for them.)
Langford, however, after struggling through a car analogy to make his point, hit on a good one with Bob the Milkman (a.k.a., the cable guy), where Bob delivers many bottles of milk an hour but by regulation has to give away four of them each hour for free (the four ad spots).
"And one day, there you all are, sitting in his truck telling him that you’re now taking three of his four bottles," said Langford. "Bob might say something like: ‘I don’t think that’s a very good idea.’
"I see you trying to take Bob’s milk and I don’t know why I should let you."
And since Bob is already used to being regulated and shuffling money this way and that for good causes (Canadian content) and already has the distribution platform and marketing and sales structure in place, "Isn’t it Bob I should ask to do this?" asked Langford.
No, said Craig. "You need a third party to do this… The goal is to extract as much ad dollars as possible and to do it in an efficient manner," he said, resisting the milk analogy. Cable and other applicants have been told no they can’t do this (or something like this) in the past and OII can do it quickly and efficiently, said Craig.
"Every day that passes is a lost opportunity to capture that time and do something useful with it," said Craig.
Back to the milkman: "Why do we need the middle man when we could get the whole three bottles if we just deal with Bob?" said Langford. "He’s been mad at us for years anyway."
Calling the OII proposal a "brilliant and imaginative idea, Langford then said something that might have chilled Craig and his cohorts a little. "Why don’t we just steal your idea and make (the BDUs) do it?"
Craig responded by pointing to the last Canadian Cable Television Association proposal to sell the local ad avails where just 25% of the money coming in from those sales would go to production, adding that OII would send through a far greater percentage.
Noting that the two minutes of ad time is something contracted to the BDUs, Langford stood firm (and dropped the Bob analogy). "You are going to get something that belongs to someone else… They’ve got the synergies… I could make the argument that they could do it better than you."
Which is something Lind outlined later, saying: "We do not need a third party middleman like OII to come into our cable head-ends to replace our equipment with its own. Its business plan indicates that it plans to pocket over $60 million in profit. This is after making capital investments and paying salaries and commissions – expenses that, to a large part, have already been incurred by cable companies," he said.
"That is a lot of money to be extracted from the Canadian broadcasting system by third party middlemen. In comparison, cable operators would reinvest these funds to further strengthen the broadcasting system."
A decision is expected in late spring or early summer.
– Greg O’Brien
