OTTAWA – Rogers Media resolutely defended its decision to cut all news programming from its ethnic OMNI stations and replace it with current affairs shows before a Parliamentary committee on Wednesday.
Speaking before the House of Commons Standing Committee on Canadian Heritage, Rogers Media president Keith Pelley (pictured on CPAC.ca, which streamed the meeting) said the company really had no choice but to make changes to its programming. With viewer consumption patterns moving to digital platforms, the ongoing piracy problem, the significant drop in advertising revenue, as well as a plethora of ethnic specialty channels launched in recent years, a revamp of the conventional, linear, OMNI programming lineup was necessary, he added.
It’s important to understand, Pelley added, that conventional over the air television is under stress with advertising revenue “declining at a torrid pace. This is not just a couple of years. This is not cyclical. This is a structural change.”
The drop from $80 million in advertising revenue in 2011 to $22 million this year tells a big part of the story, he noted. This has wreaked havoc on OMNI’s traditional business of using U.S. strip programming, shows like Two and a Half Men and The Simpsons, to fund ethnic programming. Advertisers just wont pay anywhere near the same money to place spots against those repeats – which are available everywhere.
“But the way that the industry has changed and the way people are consuming (TV content now) it has changed it dramatically and as a result, we no longer can fund the ethnic programming like we did because the U.S. programming is not generating that type of margin anymore. So we’ve had to significantly change,” said Pelley.
Rogers attempted to make it clear during its opening remarks that the decision to alter its programming format about becoming self-sustaining and more relevant to a broader demographic.
“I’d like to make clear that this wasn’t just about cutting costs to save money. It was really about reinvigorating the OMNI brand and its programming. We simply saw a better opportunity to engage a broader audience on local issues with new local current affairs programs,” argued Colette Watson, VP of television and operations. “Unlike newscasts, current affairs programming has a flexible format that allows members of the community to engage and interact on local issues. It also provides a greater opportunity to delve deeper into issues, exploring a variety of different angles and perspectives which is something formal newscasts cannot do.”
But as could be expected, committee members (most of whom are gearing up for an election fight later this year) didn’t appear to buy any of Rogers’ reasons for the shift in programming with several expressing shock and highlighting the outright anger of constituents. Many also suggested the company may actually be contravening the conditions of its licence.
In response to a question from Conservative MP Julian Fantino, Pelley noted that Rogers has been talking about its challenges for three years and has gone to great lengths, repeatedly, to explain the situation to government and to the CRTC. "What surprises me today is that all of you seem surprised. I've been talking about this for three years.
“These (changes) were going to come. The industry has changed dramatically. Unfortunately ethnic programming and the audiences have deteriorated significantly and the ad revenue just cannot match the actual programming costs,” he said. “We, in every aspect of OMNI, are meeting our conditions of licence and that is very important for you to understand because under no circumstance are we not in compliance with the licence that we have. We are in compliance in every particular way.”
“That’s not the way you run a private business.” – Keith Pelley, Rogers Media
Other committee members also argued that since Rogers is a big and sophisticated communications firm with many assets, it has the wherewithal to put some of that money towards OMNI. Liberal Adam Vaughan wondered why the company isn’t using other assets within the larger corporation to subsidize OMNI. This sparked a back and forth with Pelley, leading ultimately to the suggestion that Rogers has other broadcast assets from which to draw money to support the ethnic channel.
“So what you’re saying is use the profit that Sportsnet has to subsidize OMNI. Well that’s not the way you run a private business, sir,” said Pelley. “You have to actually look at it individually. You’re not going to subsidize one business for another business. You have to look and see if they are all sustainable on their own. And OMNI, which I’ve been saying for the last three years under the current model with the current conditions of licence,is not sustainable in this structurally changing world.”
And there were even calls for Rogers to surrender its broadcasting licence and let another company enter the ethnic market.
“I’m not sure if we weren’t investing the money that we are in OMNI that there would be anybody else that would be doing under the conditions of licence that are currently there, losing the money that we currently are and producing the programming that we are,” argued Pelley.
