TORONTO – Characterizing it as an unnecessary middleman, Rogers Communications has told the CRTC it objects to any license being granted to Only Imagine Inc.
The company – which is now just an application before the Commission and a web site – wants to sell the two minutes per hour of local availability ad time supplied to cable and satellite operators by American cable channels like CNN, A&E, Golf Channel and others, into the Canadian marketplace and turn over a large portion of the profits to fund Canadian drama.
The applicants – former broadcasters Drew Craig of the former Craig Media and Jeff Theissen of the former Trinity Broadcasting (NOW TV) – say their model will contribute $170 million towards the production of Canadian content over a seven-year license term.
"It doesn’t make any sense. It’s silly," Rogers Communications vice-chair Phil Lind told Cartt.ca in an interview. "They’re our two minutes which (the U.S. cable channels) give us under contract.
"The Commission has every right to say we can’t sell them or in what manner we sell them, but beyond that, from the Rogers and Shaw perspective, that’s the end of the matter. Nobody has any right beyond that. They can’t do anything like this," Lind continues.
"It’s our two minutes – and then they want to camp on our headend as well. It’s absurd."
The current regulations say that Canadian satellite and cable companies must give 75% of that two minutes to Canadian broadcasters and can keep the rest only to promote their own services. They are not allowed to sell the time into the market as the U.S. MSOs do. Stateside, selling local ad time on cable channels is a multi-billion-dollar market.
To Craig, however, establishing Only Imagine, which was first reported on by Cartt.ca in December, and letting it bankroll Canadian drama fixes a decades-old problem. "Everybody has recognized there’s been a one-way flow of cash out of the system from Canadian subscribers back to the U.S.," he told Cartt.ca. Craig is filing its final response comments with the Commission today.
There are a large number of Canadians who watch the channels, "with little or no contribution to the Canadian system," he continued. The OII application would sell 90 seconds of ads per hour and leave the other 30 seconds to the BDUs – the same amount of promotional time they already have.
The Commission, as we’ve noted before, has dealt with applications like this already – and fairly recently. Former broadcaster Kevin Shea applied for a similar licence for a company he called 49th Media, but it was to oversell all the ad time on U.S. cable channels to Canadian advertisers.
The Canadian cable industry has asked several times throughout its history for the ability to sell the time – promising to kick back a certain amount of funds towards Canadian content.
With the CRTC’s long-standing policy against BDUs competing with broadcasters for prime time ad dollars, Craig says OII is the best way "to monetize the avails and put as much money as we could back into the system.
"It can only benefit the Canadian system," he added. "Our response to cable is ‘they had their chance.’ It would require a significant change in the CRTC’s policy to allow BDUs to sell air time."
Craig also dismissed the concerns of his fellow Canadian broadcasters, saying that opening up time for sale on CNBC and the like will grow the ad pie and won’t damage existing specialties or conventional broadcasters. "Advertisers, given the opportunity to advertise on these channels, would put new clients on them," he said.
"There is pent up demand for these avails and it will create new money and keep money within the Canadian broadcast system… Besides, we’re just talking about 90 seconds of air time per hour."
However, added Lind, the U.S. channels object to such a middleman making money off their signals when the two minutes per hour is contracted to the cable company.
Craig confirms as much, saying he has had discussions with the American firms but adds: "They haven’t given us consent… but we’re of the view that we don’t need consent."
When OII faces the Commission, Lind says Rogers will again push for the simpler solution of letting the BDUs sell the avail time – and one expects that with CRTC policy reviews of BDUs and of Specialty and Pay services expected in 2007, that this topic will crop up throughout the year.
