GATINEAU – Canada’s independent and ethnic broadcasters faced off before the CRTC on Thursday, with the more established Category A services arguing the removal of buy-through provisions which sustain their businesses would be detrimental to Canadian content – while the newer Category B licensees want them eliminated so they can take advantage of more channel packaging flexibility.
“The BDUs have every incentive to substitute us“ and “without mandatory distribution and buy-through, Canadian programming is compromised,” argued Connie Sephton, director of corporate affairs at Fairchild Television under questioning from Quebec commissioner Yves Dupras.
In its presentation, the company questioned the merits to the broadcasting system of reducing Canadian content requirements on Category A third-language programming services on one hand, and then more flexibility in packaging of all third-language channels on the other. The result, according to Sephton, is that the company wouldn’t be able to maintain its Canadian content programming expenditure (CPE) and exhibition commitments if channel packaging “is left to vertically integrated BDUs.”
Asian Television Network (ATN) also argued in its appearance that eliminating buy-through would pose problems to the Canadian system. ATN noted that if this rule is rescinded then Category A third-language services could reduce Canadian content contributions to levels similar to Category B services. The result would be a halving of Canadian programming contributions dropping from approximately $19 million to anywhere between $7 million and $9 million, said Tony Lacombe, broadcasting consultant to ATN, in his opening remarks.
“Without the buy-through rule the issue of lack of reflection to the ethnic communities or the cultural diversity within these various communities would only get worse,” added Prakash Naidoo, VP of sales and general manager for ATN.
Getting rid of buy-through provisions would, however, be beneficial for Ethnic Channels Group because it would provide Category B channels greater packaging flexibility. The company’s co-founder and chief executive Slava Levin said the way the rules have been constructed – consumers wishing to subscribe to a Category B third-language service need to first subscribe to the similar Category A service – could drive consumers out of the Canadian system altogether. ECG suggests that if the Commission opts not to eliminate buy-through rules, then a recalibration of the wholesale rate to a maximum of $1.50 for Category A third-language services is a solution.
A GROUP OF INDEPENDENT local TV stations weighed into the Commission’s Let’s Talk TV policy hearing arguing altering the simultaneous substitution model would be devastating to them. As the Small Market Independent Television Stations Coalition (SMITS) noted in its intervention, it can mean the difference between “soldiering on and turning out the lights.”
Glenda Spenrath from Newcap Broadcasting said the value of simultaneous substitution to the small market stations is valued at approximately $25 million to $30 million annually. “Eliminating simulcast on live programming would wipe out our ability to sub-licence such programming and earn revenue from it,” she said. “Without the ability to generate revenue from our local commercials appearing on hockey games and award shows… we would not only lose the simulcast revenues, we would lose all the promotional and revenue benefit we currently get from such signature shows.”
“The cost recovery model hasn’t worked. I’m pretty sure it costs the same to run avails in Ottawa as Toronto … but the reality is there are different cost recovery rate cards for those services.” – Cal Millar, Channel Zero
The SMITS members are in trouble financially and need help to get back into the black, they argued. A solution would be to require cable and satellite companies contribute a small portion of their revenue to support small market stations in a new Local Independent Television Compensation Fund (something which the CBC also argued for). This wouldn’t be new money, noted Rick Arnish, chair of the Jim Pattison Broadcast Group, but from the existing 5% contribution BDUs make to small markets.
The SMITS members are Jim Pattison Broadcast Group (three stations; two in BC and one in Alberta), Newcap (two stations in Alberta), Thunder Bay Television (two stations in Ontario), Corus (two stations in Ontario), RNC Media (three stations in Quebec), Télé Inter-Rives (four stations in Quebec), Miracle Channel in Lethbridge, Newfoundland Broadcasting in St. John’s, and CHEK TV, Victoria BC.
Together, those stations generated about $95.3 million in total revenues in 2013, representing about 4.9% of the private conventional television sector.
Thursday’s session also saw the Commission explore in a somewhat fuller fashion Canadian programming discoverability options. Channel Zero, owner and operator of CHCH, suggested a significant alteration in the way U.S. local avails are used in order to improve independent broadcasters’ ability to promote and market their services. The company said allocating 50% to each of the BDUs the other half to non-vertically integrated broadcasters could be a simple solution.
The local avails are the two minutes of ad time per hour in which American cable channels such as CNN and A+E make available to BDUs for local sales. In the States, it is a multi-billion dollar business, but in Canada, CRTC regulations say the time can not be sold, so 75% can be used by the BDU for public service announcements, community channel promotion and promotion of Canadian broadcasters. The other 25% can be used by the BDUs to promote its own services.
Under questioning Cal Millar, president and COO of Channel Zero, highlighted the difficulty associated the local avails and potential they can offer for Canadian programming discoverability.
“The cost recovery model hasn’t worked. I’m pretty sure it costs the same to run avails in Ottawa as Toronto … but the reality is there are different cost recovery rate cards for those services,” he said. “We said why don’t we try to make it simple, try to make it equitable. We think it’s a very easy way to increase the discoverability of the independent broadcasting services and Canadian programming specifically.”
Chairman Jean-Pierre Blais thanked Channel Zero for the proposal noting is was a unique new idea offered to the proceeding when it came to the issue of discoverability.
The Let’s Talk TV policy hearing concludes tomorrow with Netflix as the headliner.
