Hull, Que.: It’s the second half of August, a hit-and-mostly-miss Canadian summer, a government burg scarred by asphalt eyesores. But against all odds, from deep within the inane architecture of a government monstrosity called ‘Portage Phase iv,’ a poet rises. He is crtc commissioner Ron Williams. He is addressing the umpteenth group of applicants appearing before the regulatory panel to say why they should receive a new licence or six for digital specialty television channels. This is what he says:

‘Let me set the scene. Eighty-eight Category 1 proposals. Millions of dollars the prize. A new digital era begins. Exciting new partnerships. The digital pay and specialty hearing, only 10 will survive. Catch the action, sense the drama daily on cpac. Good luck to all and also remember tonight is the grand finale of the popular show Survivor.’

It is only the second week of a multi-part hearing, but survival is clearly a challenge both for applicants gnawing on their promo materials and commissioners wading through mounds of paper and repetitive questions. When the action/droning ends later this month, the commissioners will have seen and heard presentations by channel applicants, intervenors, applicants’ defense against nay-sayers and applicants’ reiteration of why they should win, which of their applications they really want the most, and why direct competitors should be shut out.

Sophie’s channel choice

The last part may separate the proverbial women from the girls, however, since applicants may be nudged on which of their channel ‘children’ they love best. Alliance Atlantis Broadcasting’s Phyllis Yaffe told Playback, for instance, that aab’s high commitment to Cancon spending in its independent film channel shows that’s the licence it most covets.

While Corus Entertainment made strong presentations – with excellent videos – for all six of its Category 1 proposals, its spin for The Canadian Documentary Channel stood out both because of its public sector partners, cbc and the National Film Board, and because of the planned role for veteran indie producers. Since Canada is a country ‘steeped in the documentary tradition,’ it was apropos that during the Corus presentation nfb chair Sandra Macdonald quoted from a letter from fiction denizen Bernie Zuckerman: ‘It is unthinkable that there could be a documentary channel without cbc and nfb involvement,’ he wrote.

As for the Global TV Network, it seemed evenhanded in its support for its six Category 1 applications. Still, it was hard to overlook the cheese and humor in the proposal for Violet, a romance channel, when presenter Catherine Thomson suggested Canadians would love to see more on ‘Pierre and Maggie, Pierre and Barbra, Pierre and Liona…and Mackenzie King and his dog.’

Money, money everywhere…

The commission focused on a few main themes – which channels will push viewers to buy set-top boxes and a digital package, how best to package new channels, how best to regulate Cancon spending, when should the on-air launch be and even whether Canadian specialtycasting needs diversity in ownership.

Applicants cited as main considerations ‘attractiveness’ and diversity of channels and their programming mix, amount of Cancon programming, the importance of supporting indie producers, and the export potential of programming and channels.

Chum Limited made the point that in some cases – with new channels upping the demand for Canadian or other programming and few new public production dollars coming in, there will be a Cancon shortage. Rather than promise high Cancon levels – in the 60% to 70% range – Chum offered 30% as a more realistic level and said it would not have to ask the crtc later for a licence amendment.

On the issue of licensing prodcos to become channel owners, the commission panelists, especially crtc chair Francoise Bertrand and vice-chair Andree Wylie, asked applicants whether new players could survive in the digital world if they do not already have a broadcasting infrastructure, and expertise, in place.

Typically, applicants who already hold one or more licences argued new players would likely not make it, noting that while analogue services began seeing profits in the first two or three years of a first licence term, penetration levels will start smaller on digital and grow more slowly.

Said Global tv’s Kevin Shea: ‘When you look at digital in other countries, the u.s., u.k., you’d better be able to sustain a long road to profitability,’ adding he thinks $50 million is at risk, per channel.

The counter argument, from veteran prodcos such as Stornoway Productions and Salter Street Films, is that with the Canadian entertainment industry consolidating rapidly, fewer points of view are reaching audiences.

As Salter’s Catherine Tait told the panel: ‘We have suggested…that you consider new entrants as a priority for Category 1 licences because realistically it is the last time we can make a contribution to the system as broadcasters. We have suggested that you invite the established multiple licence holders to apply their market position and their deep pockets to the arena of Category 2.’

And, closing the circle on the Survivor-themed poem from commissioner Williams, ssf’s Michael Donovan said: ‘Survival is one of the critical things for our company given the issues of consolidation. This is the question that is before us. There are expanding numbers of channels, plus shrinking numbers of players. The range of choices for producers is becoming more limited and we feel the best way that we can continue to make our contribution to Canadian programming is through these offerings.’

CAB intervenes

As part of phase two, the intervention process of the hearings, the Canadian Association of Broadcasters, on Aug. 30, brought forth a four-point plan that promotes choice, channel packaging, access and marketing.

The association’s first recommendation is for the crtc to license more than 10 Category 1 services.

‘The commission is in the position to ensure diversity by licensing Category 1 services in all remaining significant genres. Choices made by others (i.e. cable operators) may not serve the interests of diversity, and may well result in u.s. services occupying genres that could be filled by Canadians,’ said cab president and ceo Michael McCabe.

The best way to provide value and choice, continued McCabe, is by first promoting all-inclusive packages, and then theme and general-interest packages.

He used Canada’s most successful digital distributor, BellExpressVu, as an example of how innovative packaging, and pricing, have driven the penetration of Canadian specialty services so far. Approximately 80% of BellExpressVu subscribers choose to receive all Canadian specialty services.

McCabe also noted that in the u.s., AT&T Broadband is in the process of abandoning a la carte distribution for themed and general-interest packages.

Thirdly, the cab says the issue of equitable access will be a key determinant in the success of the new digital services.

‘Non-affiliated digital services must have an opportunity to negotiate a fair deal,’ said McCabe. Likewise, the association endorses the creation of an industry fairness code, to be approved and enforced by the commission.

The proposed code would be developed through an Industry Working Group sanctioned by the commission and should include: equitable terms of access; prohibiting services to be offered on an a la carte basis without an affiliation agreement; equitable sharing of launch costs and risks; and equitable access to the electronic program guide.

The cab’s final issue is the marketing of the new digital channels for which it proposed that a joint marketing committee ensure launch co-ordination, packaging and pricing, sharing marketing costs and free preview periods. *