GATINEAU – The CRTC must give broadcasters the flexibility to compete against over the top (OTT) competitors such as Netflix, Google and Hulu, Shaw Media told the CRTC during the third day of the group-based licence renewal hearing.
“The threat today from over-the-top television is alarming,” said Paul Robertson, group VP of broadcasting and president of Shaw Media. “It stems from major structural shifts in technology and rights exploitation that are permanently reshaping the global broadcast landscape.”
Emerging OTT services have maintained that they aren’t competitive with existing broadcasters, but Shaw says nothing could be further from the truth. Conventional broadcasters and specialty service owners have to compete with OTT on a number of levels: program acquisition, subscription fees and advertising revenue.
“Given what we’ve seen over the last six months, we know that they will have a destabilizing impact on the Canadian broadcast system, if they continue to be allowed unfettered access,” added Robertson.
Netflix has made a big splash on the Canadian market, closing in on one million subscribers in less than a year of operation. Plus, the online distributor has acquired a few exclusive programming rights, essentially transforming itself into an online broadcaster.
Barb Williams, senior VP of content at Shaw Media, highlighted the impact that Netflix is already beginning to have on the Canadian broadcast system by pointing to the agreement Netflix inked with Paramount covering hundreds of hours of exclusive content to be distributed in Canada, the acquisition of exclusive rights to 26 episodes of the new original production House of Cards, starring Kevin Spacey, and the deal to acquire the rights to Mad Men’s earlier seasons and future reruns, for about $750,000 per episode.
“It may be tempting to dismiss these as one-offs, possibly a concern for Pay TV but not specialty or conventional. Unfortunately, that’s not what we see,” Williams said. “The regulatory bargain for private conventional TV lies in the model of profits from U.S. programming that subsidizes Canadian content. Netflix’s moves strikes at the heart of that bargain, and losing control of program rights for U.S. series will jeopardize our ability to uphold that bargain.”
Ken Stein, senior VP of corporate and regulatory affairs for Shaw Communications Inc., noted under questioning that the sector has to have enough flexibility to adapt to new technologies and services such as Netflix and do it in a way that recognizes all players have to contribute to the Canadian broadcasting system.
“Our view on Netflix is that it is providing broadcasting content. It’s not Canadian owned or controlled as per the Broadcasting Act,” he said. “When you operate in a country, even if you operate under the basis of an exemption, you have to be consistent with the laws that exist. The Broadcasting Act is quite clear: any broadcasting service provisioning programming to Canadians must be Canadian owned and controlled. If it looks like a duck, it’s a duck.”
Shaw proposes licence amendments
The broadcaster is asking for the Commission to grant a change in status for its Montreal Global station, CKMI and designate it local programming improvement fund (LPIF) eligible. This, says Shaw, will allow the company to improve its local news programming and with better financials.
Charlotte Bell, VP of regulatory and government affairs at Shaw Media, noted in the opening remarks that because it’s likely CKMI has fewer than one million viewers it should qualify for LPIF status.
Under questioning, Troy Reeb, VP of news, said the money would go a long way to bettering the programming on CKMI. “With LPIF funding we would anticipate doing additional weekend and having other resources added to our news coverage as well. It would probably be as much a qualitative improvement as it would be a quantitative improvement in hours,” he said.
In addition to the LPIF funding request, the company wants greater programming flexibility for three its specialty services: Showcase, Slice and Tvtropolis. For Showcase, Shaw is asking to increase the amount of U.S. programming on the channel from 10% to 20%. These changes wouldn’t alter the channel’s condition to air 100% Canadian programming from 7 p.m. to 10 p.m. or that 95% of its schedule be focused on drama.
Citing overly burdensome licence conditions for both Slice and Tvtropolis, Shaw wants the Commission to grant it greater programming flexibility. For Slice, Shaw wants the current Canadian exhibition requirement of 82.5% reduced to 60%. And for Tvtropolis, the company wants an amendment relieving it of the requirement to air only scripted programs that are at least 10 years old. It wants the level reduced to 50%.
“TVtropolis would then be able to attract the demographic it originally set out to serve by scheduling its programming in a manner that better reflects the interests of older viewers,” Bell said.
The hearing continues with many interveners such as Telus, the CMPA, CACTUS and the Independent Broadcasters Group, and will wrap at the end of next week with final replies from the broadcasters themselves.
