TV Policy center stage at CRTC hearing

Gatineau, QC: Will Canada's conventional broadcasters get more deregulation, more options for delivering HD service and more revenue in the CRTC's next TV policy? If the tone of the hearing held here tells the tale, the answers are likely to be 'yes-and-no,' 'yes,' and 'no.'

Gatineau, QC: Will Canada’s conventional broadcasters get more deregulation, more options for delivering HD service and more revenue in the CRTC’s next TV policy? If the tone of the hearing held here tells the tale, the answers are likely to be ‘yes-and-no,’ ‘yes,’ and ‘no.’

For seven days this month and last, the CRTC heard spirited and often sharply conflicting testimony from dozens of broadcasters, unions and cable operators on how to change, or not, the rules for over-the-air television in Canada, all looking to set the course for media in this country for years to come.

Foremost on many agendas was the CRTC’s controversial 1999 Television Policy, which has remained a target of unions and guilds including the WGC, DGC and ACTRA since it revoked minimum spending requirements on Canadian content, among other changes. Broadcasters, meanwhile, came looking to charge new fees to cable and satellite companies.

‘It’s time for a new regulatory bargain,’ said DGC national exec director Pamela Brand during her Dec. 4 presentation, calling on casters to spend more on priority programming, especially drama.

ACTRA exec director Stephen Waddell earlier noted that, according to CRTC statistics, spending on drama, the costliest genre, has ‘declined to only 3.2% of revenues… the lowest level in eight years and a drop of 37% since 1998.’

The unions want private conventional broadcasters to be required to spend at least 7% of their gross ad revenues on Canadian-made drama. The CFTPA, meanwhile, wants the largest TV licensees to spend 12% of broadcast revenues on drama and other priority programming, climbing to 15% in the next licence term.

But at least one of the five CRTC commissioners – none of whom were with the federal agency in 1999 – seemed unmoved. Richard French, thought to be in line to succeed Charles Dalfen as chairman, sparred with director Tim Southam (One Dead Indian) over whether the unions were seeking to ‘micromanage’ the broadcasters.

‘We are going to require them to invest a minimum of their revenue in Canadian drama,’ said French, repeating the union arguments. ‘We are going to require them to produce a minimum amount per week. We are going to tell them when they have to schedule that drama. We are going to require them to pay an unspecified amount for an unspecified source to promote the drama…’ and so on.

‘I submit to you that there is not a hell of a lot left for a programmer to do after you or we have told them to do all those things, is there?’ he asked.

Southam responded that no one is telling the broadcasters how to spend on the drama sub-categories, and that Canadian drama is a small part of the broadcast day.

French later made a similar jab, accusing Judy Davey, a Molson marketing exec appearing with the Association of Canadian Advertisers, of ‘second-guessing’ the networks. The ACA is seeking to retain the current 12-minute-per-hour limit on ads.

‘They are after a cash grab,’ Davey shot back, ‘short-term interest.’

Broadcasters say they can’t afford to make drama or other high-price genres because of weakened ad revenues, fragmentation of the market and the cost of converting to digital and high definition.

CanWest Global CEO Leonard Asper complained that his outfit’s profit before interest and taxes in 2005 was 11% of revenues, less than half that of 1982.

Ivan Fecan, president and CEO of CTV parent Bell Globemedia, put down calls for increased Cancon regulation.

‘Who do we serve if we fill the airwaves with shows no one watches?’ he asked. ‘The lesson we learned… and have applied everywhere we can, is that if you concentrate on the creative, remove the well-intentioned bureaucratic framework of the funding agencies and put quality ahead of volume, your odds of developing a hit increase exponentially.’

Broadcasters had earlier asked for further deregulation of programming, extra ad minutes, flexibility on product placement and – a very hot topic – the right to charge fees to distributors for carrying their signals.

Asper argued that conventional broadcasters have not received the protection they expected against U.S. border stations, and that cable and satellite operators have never paid to carry their signals, although they do pay to carry specialty channels such as TSN or RDI. Broadcasters have been given some advantages, such as simultaneous substitution but, he says, these only represent about 40% of the signals’ value.

Broadcasters now face greater competition from the Internet, specialty channels and other outlets and, by seeking fee-for-carriage, they are asking for the remaining 60%, Asper said. ‘We need it to continue to provide the service we are providing.’

Siding with its private-market rivals, CBC also asked for the right to charge carriage fees. President Robert Rabinovitch suggested that the commission could use the upcoming licence renewal hearings to determine if fees would be appropriate for licensees.

CBC also discussed its plan for a hybrid approach to serving over-the-air customers, via either digital transmitters or cable, satellite or IPTV, once analog signals are turned off.

But cable and satellite operators came down hard on carriage fees, with Rogers Communications chief Ted Rogers dismissing it as ‘trash’ during a scrum with the media. He was more polite during the official presentation, but warned that fee-for-carriage would be bad for the industry and for consumers. Rogers also threatened to blame any price hikes on broadcasters.

‘Let me be clear. We will pass through any fee to our customers. And we will identify the fee as a separate line item on their monthly bill,’ he said.

Rogers argued that CTV is very healthy, and that consumers shouldn’t have to pay higher cable or satellite bills to subsidize ‘a few bad years’ at CanWest.

He also agreed with the unions’ request for expenditure requirements, but called for an ‘incentive mechanism. For every dollar spent on U.S. programming, broadcasters would have to spend a specified amount on Canadian.’

David Hardy, business agent for NABET 700, added that market fragmentation might not harm ratings.

‘TV viewing by Canadians has remained remarkably constant over the past five years, despite significant growth in broadband access to the Internet,’ he told the commissioners, citing CRTC data. ‘Overall viewing numbers have risen from 23.7 hours to 25.1 hours a week.’

Hardy cited research by Nordicity Group that projects ad revenues for CBC and the private-sector casters will rise. For private English TV stations, revenue should ‘increase from $1.68 billion in 2005 to between $1.85 [billion] and $1.91 billion in 2010.’

The commission is expected to issue its new policy in the summer.

Heard in Gatineau:

‘Who do we serve if we fill the airwaves with shows no one watches?’

-Ivan Fecan, CEO and president of CTV parent Bell Globemedia, comes out against the bureaucracy of the funding system

‘We would hope that distributors would absorb this [fee] or, in the worst case, simply pass it through without markup.’

-CTV president Rick Brace argues for fee-for-carriage,

fingers crossed

‘Let me be clear. We will pass through any fee to our customers. And we will identify the fee as a separate line item on their monthly bill.’

-A smack-down from Rogers Communications CEO Ted Rogers

‘It is a charade to sit in this room and listen to the dangers of fragmented markets when single ownership of the different platforms is more the norm than not.’

-CEP vice-chair Peter Murdoch, leaving the ‘Isn’t it, Ivan?’ unsaid

‘There is not a hell of a lot left for a programmer to do after you or we have told them to do all those things, is there?’

-Union arguments take fire from commissioner Richard French

www.crtc.gc.ca