A CRTC ruling that allows dth provider Star Choice to charge Canadian specialty and conventional broadcasters for the insertion of promotional materials during local advertising on u.s. satellite services appears to have paved the way for conventional cable operators to follow suit.

Local availabilities are the roughly two minutes per hour of ad time aimed at American consumers on u.s. satellite services. Since 1995, cable operators have been using this airtime to promote Canadian specialty channels and conventional broadcasters free of charge, as well as their own services and packages.

Due to the fact that crtc policy regarding the local availabilities, dating back to 1995, never clearly stated that distributors could not charge to ‘recover costs from the programming licensees benefiting from the exposure,’ cable execs argue that the ruling handed down in August merely confirms what was already allowed.

‘We take it as the green light,’ says Colette Watson, vp programming and public relations for Rogers Cable Systems, who says this fall, Rogers will begin charging Canadian specialty and licence holders what she calls the recoupment of costs needed to insert the promos during the local ads on the u.s. services.

Watson says Rogers is currently determining the rate structure for the airtime. ‘If you look at the value of this advertising it’s of great value, but we also incurred huge capital costs to offer this service,’ she says.

‘You have to buy machines to do this and the machines cost a lot of money, plus you have to hire people to push the buttons on the machines.’

But in an intervention filed to the crtc, the Specialty and Premium Television Association says that charging for the previously free promo opportunities will be at the expense of services with limited promotional budgets and other promotional activities undertaken by the services.

‘I think it’s inappropriate for distributors to get into the advertising business,’ says Jane Logan, president of the sptv.

‘This issue isn’t dead, we plan to raise it at the Television Policy Hearings, where the promotion of Canadian programming will be one of the issues discussed.’

sptv’s intervention also points to a letter to the crtc dated Dec. 17, 1993, in which Rogers stated that ‘This service [promo inserts] will be provided at no charge to users so long as Rogers is provided with appropriate and relevant promotional material that meets technical specifications and cab [Canadian Association of Broadcasters] guidelines.’

The intervention also notes that Rogers sent a letter to licensees in 1993 seeking support for the application, stating it ‘would like to stress that Rogers is not proposing to sell these ad spots.’

CanWest Global also filed an application opposing Star Choice’s request to charge for the local avails.

Shaw Cable Systems, whose parent company owns a majority stake in satellite cable operation Star Choice, has been charging broadcast licence holders for inserting the promos for the past year. Besides tv licence holders, Shaw Cable has also run spots for Canadian radio stations in the local avails.

‘Shaw has always had the blessing from the crtc to cost recover for those interstitials,’ says Peter Bissonnette, senior vp operations Shaw Cable. ‘We have sent out to all our broadcasters during the last year what that cost recovery is, and it’s very, very small, but it goes to recovering the capital costs and operating costs of providing that service,’ says Bissonnette.

In 1994, when Rogers first applied to the crtc for the right to insert the promotional materials in the local avails, the company’s submission did not indicate whether it would charge for the service or whether it would be free of charge.

The commission’s ruling in January 1995 also didn’t mention whether Rogers had the right to charge for the service.

And as other broadcast distribution undertakings successfully applied for the right to do the same, the crtc never made it policy that charging was prohibited.

Some Canadian programming licence holders assumed that the cable companies were prohibited from charging for the service when in fact they were not.

The Star Choice application clearly requested the right to charge for the insertion of the promos and the positive ruling sets an unambiguous precedent for cablecos to follow suit.

American cable operators such as tci derive much of their revenue from selling ad time on their systems to commercial advertising, but the current crtc decision limits bdus to charging only licensed Canadian programming services.

Up to 25% of the local availabilities can be used for the promotion of discretionary programming services and packages, customer service information and channel realignments, with up to 75% for the promotion of licensed Canadian program services.